Nolato Annual Report 2012 3

Nolato AB (publ) Annual Report 2012 2

Production of medical technology component in silicone. Nolato Annual Report 2012 3

2012 in brief

was the best year to date in Nolato’s history. Compared with the previous year, sales rose by % to , million, with operating income ( ) up % to mil- ■ Sales per quarter lion and earnings per share up % to . . The growth in earnings resulted in a strong SEKm cash flow and continued low net debt, even after the acquisition of a British pharmaceuti- 1200 1000 cal packaging company. 800 600 First quarter Third quarter 400 All three business areas showed an im- The positive trend continued for two of 200 provement. Nolato Telecom, which expe- the three business areas during the third 0 Q1 Q2 Q3 Q4 rienced a di cult , began its recovery quarter. Nolato Medical saw its sales rise with an increase in sales of % during the by % and Nolato Telecom doubled its first quarter compared with the same peri- sales, while Nolato Industrial experienced ■ Operating profit (EBITA) per quarter od during the previous year. a slowdown towards the end of the quarter, SEKm with a % dip in sales. 100 Second quarter 80 The strong growth continued during the Fourth quarter 60 second quarter, when Nolato Medical’s The rise in earnings and the reduced need 40 sales rose by %, Nolato Telecom’s by for working capital meant a strong cash 20 % and Nolato Industrial’s by %. A flow during the fourth quarter. Nolato 0 British pharmaceutical packaging com- Medical’s sales rose by % and Nolato Q1 Q2 Q3 Q4 pany was acquired in April, giving Nolato Telecom’s by %, while Nolato Industri- Medical a decidedly strong position in the al’s sales were down %. ■ Earnings per share per quarter European market. SEK 2.50

2.00 ■ Financial highlights 1.50 1.00 SEKm (unless otherwise speci ed) 2012 2011 0.50

Net sales 3,874 2,977 0.00 Operating profit (EBITDA) 444 360 Q1 Q2 Q3 Q4 Operating profit (EBITA) 303 199 EBITA margin, % 7.8 6.7 ■ Cash flow after investm. per quarter Profit after financial income and expense 272 183 SEKm Profit after tax 202 132 240 200 Earnings per share, SEK 7.68 5.02 160 Adjusted earnings per share, SEK 8.13 5.28 120 80 Cash flow after investments, excl. acquisitions and disposals 317 112 40 Return on capital employed, % 19.5 13.9 0 -40 Return on shareholders’ equity, % 17.1 11.3 Q1 Q2 Q3 Q4 Equity/assets ratio, % 46 54 Excluding acquisitions and disposals Net debt 78 82 Average number of employees 8,421 5,496

Contents The Nolato Group in brief ...... 4 Nolato’s organisation ...... 13 Sustainability / CSR ...... 26 Nolato’s shares ...... 70 Information to shareholders ...... 81 The CEO’s comments ...... 6 Nolato Medical Business Area ...... 14 Directors’ report ...... 30 Corporate governance ...... 72 Five-year review ...... 82 Nolato’s business model ...... 9 Nolato Telecom Business Area ..... 18 Financial reports ...... 38 Board and auditors ...... 78 Deﬁnitions and terms ...... 83 Nolato’s ﬁnancial targets ...... 12 Nolato Industrial Business Area .... 22 Auditor’s report ...... 69 Group Management ...... 80 Addresses...... 84

This document is a translation from Swedish. In the event of any difference between this version and the Swedish original, the Swedish original shall govern. 4 The Nolato Group in brief

The Nolato Group in brief

Development, production & sales Sales per market Sales & technology Sweden North America etc. SEK 952 M SEK 330 M

Asia SEK 1,448 M Other Nordic countries SEK 179 M Other Europe SEK 965 M

Our operations Our values ■ Sales SEKm Nolato is an accomplished supplier with Taking responsibility is one of the corner- 4000 broad technological expertise and far-reach- stones of our corporate culture, as well as 3000 ing specialist knowledge. We o er high-tech being one of our Basic Principles. Topics

2000 product and product system development relating to the environment, the working envi-

1000 and manufacturing based on polymer materi- ronment, social responsibility and ethics are als (plastic, silicone, TPE and rubber) within therefore natural and integral aspects of our 0 2008 2009 2010 2011 2012 three areas: business activities. 0 750 1,500 Miles – medical devices (such as inhalers, insulin 0 750 1,500 KM ■ Operating profit (EBITA) SEKm pens and catheter balloons) Our employees 350 – telecommunications components (subsys- The average number of employees in 300 250 tems for mobile phones, often with signifi- was ,. Of these, percent were outside 200 cant cosmetic content, as well as methods and Sweden. 150 100 materials for shielding electronics) 50 – products for industrial companies (such as Our shares 0 2008 2009 2010 2011 2012 packaging, hygiene products and vehicle com- Nolato was listed on the stock exchange in ■ Earnings per share ponents) , and its B shares are listed on the NAS- SEK DAQ OMX Nordic Exchange in the Stock- 10 Our offering holm Mid Cap segment, where they are 8 Thanks to our involvement in customers’ included in the Industrials sector. 6 development work at an early stage, we can 4 contribute towards optimising design, mate- Our history 2 0 rials and production technology, and hence Nolato was founded in as Nordiska 2008 2009 2010 2011 2012 help to achieve a better end-product. Latexfabriken i Torekov AB, with the trade- ■ Cash flow after investments We constantly try to learn more about our mark Nolato, which has been the company’s SEKm customers’ customers in order to make pro- name since . 350 active proposals for attractive technical solu- Today’s global Group is the result of 300 250 tions. This could involve retaining function- organic growth and acquisitions. The head 200 ality and strength while reducing the weight o ce is still in Torekov, Sweden, but the 150 100 of the product, developing cosmetic e ects, majority of operations are now based abroad. 50 designing components to facilitate the assem- 0 2008 2009 2010 2011 2012 bly process or reducing the product’s environ- Excluding acquisitions and disposals mental impact. The Nolato Group in brief 5

Micromoulding of medical technology component. Subsystem to water resistant mobile phone. Injection moulded and assembled ﬂush panel.

Nolato Medical Nolato Telecom Nolato Industrial Financial highlights: 2012 2011 Financial highlights: 2012 2011 Financial highlights: 2012 2011 Sales SEKm 1,159 917 Sales SEKm 1,548 935 Sales SEKm 1,170 1,129 Operating profit EBITA SEKm 133 110 Operating profit EBITA SEKm 96 11 Operating profit EBITA SEKm 105 102 EBITA margin % 11.5 12.0 EBITA margin % 6.2 1.2 EBITA margin % 9.0 9.0 Average number of employees 932 719 Average number of employees 6,741 4,052 Average number of employees 743 720

Customer offering: Customer offering: Customer offering: Development and manufacturing of polymer com- Design, development and manufacturing of com- Development and manufacturing of components ponents and systems for medical technology and ponents and subsystems for mobile phones, and and product systems in plastic, TPE and rubber pharmaceutical customers, as well as plastic phar- products and systems for EMI shielding of elec- for customers in the automotive industry, hygiene, maceutical packaging. tronics. packaging, gardening/forestry, white goods and other selected industrial segments. Geographic information: Geographic information: Development, production and sales in Sweden, the Development, production and sales in China, Swe- Geographic information: UK, Hungary, the USA and China. Sales offices in den and Malaysia. Sales and technology offices in Development, production and sales in Sweden, Germany, France and the Czech Republic. the USA and India. Hungary and Romania. Success factors: Success factors: Success factors: Medical understanding, broad technological offer- Creative development work, cutting-edge technolo- Technology, project management and productivity. ing, global production, robust quality and develop- gy, advanced project management, fast production Customers include: ment expertise. start-ups and high productivity. Atlas Copco, Brose, Haldex, Husqvarna, Lindab, Customers include: Customers include: MCT Brattberg, Sanitec, Scania, SKF, Volvo, AstraZeneca, Boston Scientific, Coloplast, Gambro, Alcatel-Lucent, BlackBerry, Ericsson, Huawei, Volvo Car. Novo Nordisk, Takeda, Medtronic. Motorola, Nokia, Sony Mobile Communications. Volatility: Volatility: Volatility: Medium. Follows the Northern European industrial Low. Steady market growth. High. Project-based operations. business cycle. Long-term growth potential. Product life cycle: Product life cycle: Product life cycle: Short. Medium/long. Long.

30% 41% 40% 24%28% 30% 31%

Share of the Group’s Share of the Group’s Share of the Group’s Share of the Group’s Share of the Group’s Share of the Group’s net sales operating profit (EBITA) net sales operating profit (EBITA) net sales operating profit (EBITA) 6 The CEO’s comments

A strong year for Nolato

Dear shareholders, tomers. In this way, for example, both Nolato e ect being greater than simply the acquired Medical and Nolato Industrial can o er their company. customers integrated electronics in medical Nolato Medical therefore remains focused was a strong year for Nolato. In fact, devices, based on Nolato Telecom’s expertise. on acquisitions. Having built up a broad tech- it was the best year since the company was And now that Nolato Industrial has identi- nology base in recent years, we are now con- founded in . fied a need for production in China, this can centrating primarily on strengthening the Nolato Medical continued its steady be achieved with a low level of risk-taking business area’s geographic platform. growth, Nolato Telecom made a strong recov- within the framework of our existing opera- Nolato is a company that drives consoli- ery following a di cult , and Nolato tions in Beijing. In the same way, Nolato Med- dation of the supplier chain. As a result of Industrial won additional market shares. ical was able to start production in China a increasingly complex product development, Total growth was %. few years ago without having to make major medical technology companies are constant- However, this solid growth does not hap- investments. ly increasing the demands placed on their pen by itself, but is the result of the constant This approach permeates the entire suppliers. In many cases, they also choose development of our o ering, working closely Group’s everyday activities. With advanced to outsource all or part of their production together with our customers, and – not least technology, proactive project management, in order to concentrate on their core compe- – a sharp focus on productivity and cost- close cooperation and an unfailing focus on tences. This trend benefits us at Nolato, with e ciency. productivity and costs, we ensure that we broad expertise and our attractive geographi- The basic principle is simple: We must remain competitive. cal presence. spend time on what creates value for our cus- Our e orts have not gone unrecognised, tomers, and on what is important to the cus- and we have received a number of prestig- Strong upturn for Nolato Telecom tomer in the long term. As a supplier, we can- ious accolades from our customers, includ- Nolato Telecom, which was a ected by weak not a ord any extravagances – anything that ing being named best mechanical supplier by demand for its customers’ products and the does not ultimately benefit our customers Sony Mobile Communications in for e ects of the natural disasters in Japan and must be eradicated early on. providing “excellent support in technology, Thailand in , experienced a very strong Since our customers constantly challenge quality, cost and deliveries” and winning Vol- upturn in . There was a steady inward us with new and tougher requirements, e - vo Cars’ Award of Excellence – Cost Com- flow of new projects throughout the year, and ciency improvements are not just one-o petitiveness in . sales rose by %. events – they are a permanent, constant pro- Operations in the mobile phone sector cess. Similarly, sustained investments in tech- Sustained growth for Nolato Medical are project-based. This means that the most nology and our own unique cutting-edge Nolato Medical's operations, which focus on important parameters for us are not the over- solutions are another important element of medical technology and pharmaceutical cus- all market trend, but how the specific mobile our e orts to strengthen our long-term mar- tomers, feature a long-term approach com- phone projects in which we ourselves are ket position. bined with extremely strict requirements in involved are received by consumers. terms of quality, safety and traceability. These We must consequently be skilled at dealing Customer-focused business operations have shown excellent improve- with rapid fluctuations. That fact that Nolato Nolato’s business is conducted in three cus- ments for many years, and the strategy is to Telecom has coped well with this volatility in tomer-focused business areas, each of which create sustained growth, both organically and the last three years – thanks to our dedicat- addresses the industry-specific conditions through acquisitions. ed employees and highly flexible production required in order to succeed. In April, we completed the acquisition of structure – is proof of our capabilities in this Our far-reaching decentralisation creates the British company Cope Allman Jaycare, respect. a sound basis for dedicated and motivated which has now been renamed Nolato Jay- A considerably more stable part of the employees, while enabling us to make opera- care. This acquisition represents a significant business area’s operations is based on the tional decisions in close contact with our cus- expansion of the business area’s operations in ever-increasing need to ensure that electron- tomers. pharmaceutical packaging, a much stronger ic equipment does not cause or su er from We also attach great importance to what position in the European market, access to a interference with other electronic equipment. unites the Group and ensures that the whole is number of new production technologies and For many years, Nolato Telecom has succeed- greater than the sum of its parts: Shared val- a considerably broader product range. ed in creating e cient solutions for shielding ues, broad expertise in polymer technology This is precisely the type of acquisition that electronics from electromagnetic interference and similar production technology. we aim for. Adding new customers and new (EMI). Our three business areas often work technologies enhances our existing operations Today, Nolato is a leading supplier of together to create even more value for cus- and brings excellent benefits, with the overall shielding solutions in the telecommunications The CEO’s comments 7

sector. For example, many base stations in mobile networks globally are consequently equipped with our gaskets, which both shield the electronics against EMI and keep out dirt and moisture from these extremely exposed units at the tops of antenna masts. We are now taking the next step by expanding our o ering to include market segments other than telecommunications, with the aim of becoming a world-leading total supplier of shielding solutions.

A good year for Nolato Industrial Nolato Industrial also enjoyed very good growth levels in , despite a slowdown in the autumn. The business area tracks the Northern European industrial business cycle, and we have therefore prepared for a certain downturn in by adapting our production resources. If productivity and a focus on costs are important elements of the entire Group’s operations, they are absolutely vital to Nolato Industrial. Through constant improvements and lean manufacturing – involving a sharp focus on e ective processes, reduced reject levels, shorter lead times and new solutions – we ensure that the fundamentals for sound competitiveness are in place. This also involves a high degree of technical expertise and proactive project management, which can support the customer from an early stage. Having the necessary expertise and resources for early involvement in customers’ risk of reprisals or pressure. The system was Strategic priorities for 2013 product development is an important part trialled at three of our units in , and will For Nolato Medical, the overall strategic pri- of our overall ability to compete. Naturally, be rolled out throughout the Group in . orities for are a greater focus on sys- this is true not only for Nolato Industrial but I note that the Group-wide targets that tem projects and a sustained focus on global also the rest of the Group. We are witnessing we have set for our sustainability and social expansion. a clear trend of customers reducing supplier responsibility work are also bearing fruit. Not Nolato Telecom will maintain its focus on numbers, and of those players with the right only are we gradually approaching these tar- cutting-edge technologies and further devel- expertise and resources to be involved in the gets; there is much greater awareness about oping profitable niche transactions, including entire process being best placed to win busi- the importance of such issues to us all. in EMI shielding. ness. Finally, Nolato Industrial will continue to Standing prepared and strong focus on market shares, productivity, costs We take responsibility At the time of writing, there are many signs and cash flow. Taking responsibility has been a fundamental of a market downturn, for which we have Nolato is well positioned to face the future, element of Nolato’s core values right from the made preparations and adaptations. and we look forward to a new financial year – start. We therefore constantly work to ensure Nolato Medical and Nolato Telecom have our seventy-fifth. that these values permeate the entire business, a limited exposure to market fluctuations, not only in theory but especially in practice. while Nolato Industrial is highly dependent Torekov, March We carry out regular training on sustainabil- on the Northern European industrial business ity issues and take a zero tolerance approach cycle due to its impact on customers’ produc- to divergences from our Code of Conduct. tion volumes. To further strengthen our control mech- Our strong financial position gives us a firm Hans Porat anisms in this area, we have introduced a foundation and enables our customers to feel President and CEO whistleblowing system enabling employees secure in their choice of Nolato as supplier, to report suspected irregularities without the even in times of recession. 88

Efficient production is a key element of our business model. Nolato’s business model 9

Our value-creating business model

■ Our business mission

Customers Developed solution Nolato Nolato is a high-tech developer and manufacturer of polymer product systems for leading customers in speciﬁc market areas. With its many years of experience, in-depth expertise in materials and processes, early involvement in customer projects, advanced project management and detailed knowledge of each customer’s speciﬁc requirements, Nolato is an effective and innovative partner.

■ Our vision ■ Market ■ Function ■ Development Nolato shall be the customer’s ﬁrst choice of ■ Application ■ Cost-effectiveness ■ Project management partner. ■ Speciﬁcation ■ Flexibility ■ Construction/design ■ Production ■ Logistics ■ Nolato’s Basic Principles

We are professional – We are professional, and we strive for long-term profitability Close and long-term cooperation of our base technologies and those parts of – We focus on the needs and wishes The companies within the Nolato Group the value chain within which we are active. of our customers develop and manufacture components and Thanks to our involvement in customers’ – We combine skill and experience complete products in polymer materials development work at an early stage, we can with new ways of thinking (plastic, silicone, TPE and rubber) for cus- contribute towards optimising design, mate- We are well organised tomers in various market segments. rials and production technology, and hence – We build our operations on a shared Some of the companies within the Group help to achieve a better end-product. foundation also develop, manufacture, market and sell We therefore constantly try to learn more – We take opportunities and solve problems their own polymer products, such as pharma- about our customers’ customers in order to when they arise ceutical packaging. make proactive proposals for attractive tech- – We make sure our operations are The business model is based on combining nical solutions. This could involve retain- well organised a high degree of expertise with close, long- ing functionality and strength while reducing term and innovative cooperation with our the weight of the product, creating unique We are responsible customers. With highly developed, leading design solutions that make the product spe- – We work actively towards sustainable polymer technology, advanced project man- cial, designing components to facilitate the development agement, extensive expertise in development forthcoming assembly process or reducing – We focus on social responsibility, and design, and e cient production, we cre- the product’s environmental impact through integrity and openness ate added value for our customers and for creative solutions, new material choices and ourselves. tailored production processes. Short decision paths, close customer contact and flexible production capacity enable The value of three business areas us to deal with changes in our business envi- The value of three business areas is another ronment, quickly and e ectively. key feature of our business model. The fact Our customer o ering comprises most that all three business areas are a ected di er- technologies within the field of polymers, and ently by business cycle fluctuations, events in includes the entire value chain from concept the wider world and market patterns means development to product delivery. On pages that they complement each other. Togeth- to , you can find a more detailed description er, they thereby make up a whole which can 10 Nolato’s business model

stand more steady in times of financial tur- tion of our sustainability work can be found ■ Eight factors that create value moil and market uncertainty than any sin- on pages -. gle business area could on its own. Com- ■ Advanced, leading technology bined with the Group’s financial strength, this Quality and certifications in three market segments means greater security for our owners, our Nolato’s quality policy signifies that we shall ■ Expertise in development and design employees and of course our customers. always meet our customers’ exacting require- ■ Efficient and flexible production On page you will find a summary of the ments, needs and expectations. capacity business areas’ industry-specific conditions All our operations shall be quality certified ■ Advanced project management that form this whole. in accordance with ISO . This compre- ■ Expertise in applications which hensive standard is supplemented by indus- adds value Our Basic Principles try-specific certifications such as ISO Taking responsibility is one of the corner- (medical technology), ISO (pharma- ■ Effective adaptation in a changing world stones of our corporate culture, as well as ceutical packaging) or ISO/TS (auto- being one of our Basic Principles. Issues relat- motive), depending on the activity in ques- ■ Continuous sustainability work ing to the environment, the working envi- tion. ■ Strong financial position ronment, social responsibility and ethics are In addition to quality certification, all pro- therefore natural and integral aspects of our duction units shall also be environmentally business activities. A more detailed descrip- certified in accordance with ISO . ■

■ Our base technologies

Injection moulding Injection moulding is our main technology. It is a method used to manufacture, with small tolerances, components made out of plastic and other polymer materials. The raw material is melted down and injected under high pressure into a mould. After cooling, the mould is separated and the ﬁnished component extracted.

Injection blow moulding Nolato uses injection blow moulding in its production of plastic pharmaceutical packaging. The method ﬁrstly involves the injection moulding of the container to give the upper part, with the neck and fasteners for the lid, a precise shape. The lower part is then inﬂated to form a container of the right size and shape.

Extrusion Extrusion is a method for continuously manufacturing products in strands, such as tubing. Nolato uses the technique in manufacturing tubing for medical technology applications, such as catheters, and in manufacturing gaskets for EMC shielding in telecommunications.

Dip moulding Dip moulding is used to manufacture breathing bags, ventilator bellows and catheter balloons from synthetic or natural rubber latex. Pre-heated formers are dipped into liquid latex rubber and products are shaped by the geometry of the formers.

Die-cutting Nolato offers both ﬂatbed and rotary die-cutting. Flatbed die-cutting is used, for instance, in manufacturing engine gaskets. Rotary die-cutting enables manufacturing small gaskets and cosmetic details for mobile phones, such as logos and speaker protection, on a supporting tape for easy processing in ﬁnal assembly. Nolato’s business model 11

■ We are present in important parts of the value chain

Concept development Design Choice of material By providing our expertise within polymer tech- We come up with suggestions for technology and Based on our in-depth knowledge about polymer nology, we support our customers early on, in the design solutions, adapted to future trends and technology, we make suggestions about suitable concept phase. fashion. materials for the customer’s products.

Construction Prototypes Production tools Based on the customer’s design, we construct We visualise the product by producing prototypes We specify and manufacture, or buy in, moulds the product so that it fulﬁls the goals and can be and materials samples. and related production equipment. produced efﬁciently.

High-volume production Post-processing Quality We manufacture components by injection mould- We give the products their ﬁnal ﬁnish through With automated vision systems, professional oping, injection blow moulding, extrusion, dip painting, printing, metallic surfacing and/or other erators and continuous improvements, we en- moulding or die-cutting. decoration technologies. sure the correct quality for customers.

Purchasing Assembly Logistics We buy in and check components that we do not We assemble manufactured and purchased com- We deliver on a bespoke basis to customers’ manufacture ourselves, for instance displays, ponents. Automated and semi-manual, in high, assembly plants or warehouses, or directly to speakers and other electronic components. medium and low volume. their customers. 12 Nolato’s financial targets

Our financial targets ■ Financial targets and target achievement The Board of Nolato has established long- term ﬁnancial targets for margin, return and equity/assets ratio. The Board annually estab- ■ EBITA margin lishes the level of those targets. The targets are to be seen as an average over a business Target 8 percent % cycle, and were most recently revised ahead Outcome 7.8 percent 10 of , when the margin target was adjusted The target for the EBITA margin is that it 8 Target upwards by one percentage point. The change shall be percent over a business cycle. was motivated by the growing proportion of The outcome for was . percent. 6 medical technology, where the margin is nor- Excluding a positive non-recurring item mally slightly higher than for the Group’s 4 of million, the margin was . per- other operations. cent. 2 In the last ﬁve years, the EBITA margin Growth 0 has averaged . percent. Nolato strives to achieve growth that is at 2008 2009 2010 2011 2012 least in line with growth within each market segment. In , all three business areas met this target. Nolato Medical’s sales were up % (adjusted for currencies and acquisitions). Accord- ing to estimates, growth in Nolato Medical’s

■ Return on capital employed % market segments is –%.

25 Nolato Telecom’s sales were up % Target 15 percent (adjusted for currencies). During , the Outcome 19.5 percent 20 global mobile phone market contracted by The target for return on capital employed .% according to Gartner. 15 Target is that it shall be percent over a busi- Nolato Industrial’s sales rose by % ness cycle. 10 (adjusted for currencies). This is a good deal The outcome for was . per- higher than Swedish industrial production in 5 cent. general, which fell by .% according to Sta- In the last five years, return on capital 0 tistics Sweden. employed has averaged . percent. 2008 2009 2010 2011 2012 Growth strategy Nolato’s growth strategy is based on creating organic growth within all business areas and further strengthening Nolato Medical’s glob- ■ Equity/assets ratio al presence by taking over customers’ out- sourced production operations, and through % Target 35 percent acquisitions. Selective acquisitions within 60 Outcome 46 percent Nolato Telecom and Nolato Industrial may The target for the equity/assets ratio is 50 also be of interest if they bring new technol- that it shall be percent over a business 40 ogy or new customer segments. cycle. Target 30 The outcome for was percent. Nolato provides no forecast for 2013 In the last five years, the equity/assets 20 As in previous years, we are not providing any ratio has averaged percent. 10 forecast for . The reason for this is that Nolato, as a sup- 0 2008 2009 2010 2011 2012 plier, conducts operations that are highly dependent on our customers’ internal decisions and commercial performance. Factors among customers that we cannot influence, such as postponed or cancelled projects, higher or lower sales volumes and longer or shorter product life span, are thus of great significance to Nolato’s sales and profit. Nolato’s organisation 13

Three customer-focused business areas Nolato’s organisation features far-reaching ■ Three business areas that balance our operations decentralisation, creating a sound basis for Nolato Medical Nolato Telecom Nolato Industrial committed and motivated employees while enabling us to make operational decisions in Product Components Components Components close contact with our customers. Systems Systems Systems Operations are conducted in three custom- Consumables Techniques Standard products Niche technologies er-focused business areas. The aim of this is to create the industry-speciﬁc conditions for Product life cycle Long Short/project Medium/long each business area that are essential if we are Number of customers Medium Few Many to achieve success with our customers. – Nolato Medical’s operations within Success factors Medical understanding Creative development Technology medical technology and pharmaceuticals fea- Broad technology offering Cutting edge technology Project management Global production Adv. proj. management Productivity ture long development processes, product life Robust quality Fast production start-ups cycles that span many years, and very strict Development expertise High productivity demands in terms of quality, traceability and safety. Market Continental/Global Global National/Continental – Nolato Telecom’s customers within the Market growth mobile phone sector have tough demands for creative material and design solutions, Driving forces Quality of life Technology development Industrial production extremely short development times and fast Welfare diseases Increased communication Cost-effectiveness production start-ups, while their products Increased self-care Innovation have a short life span. – Nolato Industrial’s market is more fragmented, with a large number of players ■ Strategic focus of the business areas involved. The key words here are proximity to the customer, technological expertise and a Nolato Medical very high degree of automation. ■ Organic growth – Growth market The element that links the three business ■ Taking outsourcing projects – Structural changes areas together is in-depth expertise within ■ Global expansion and acqui- – Further internationalisation polymer technology, similar production tech- sitions nologies, expert project management and a Nolato Telecom ■ Organic growth high degree of e ciency within production – Rapidly changing growth market ■ Broadened customer base and logistics. – Project-related/volatile ■ Technology and project Through collaborating closely across busi- – Strong price pressure management ness area and company boundaries, we can Nolato Industrial capitalise on each other’s experiences and – Tracks the industrial business cycle ■ Market share hence o er each customer optimal solutions. – Fragmented market ■ Productivity A more detailed description of our business – Polymer materials gaining ground ■ Cash ﬂow areas can be found on pages –. ■

■ The business areas’ share ■ The business areas’ share of net sales of operating proﬁt (EBITA) % % 100 100 Nolato Industrial Nolato Industrial 80 80

60 60 Nolato Telecom Nolato Telecom 40 40

20 20 Nolato Medical Nolato Medical 0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 14 Nolato Medical Business Area

Nolato Medical Acquisition in the UK and continued good growth

Nolato Medical saw sales rise to , extension includes a new clean room for med- ■ Nolato Medical in brief million (), corresponding to growth of ical technology production. %. Adjusted for currencies and acquisi- Head of Business Area: tions, sales rose by %, which is in line with Christer Wahlquist Born in 1971 market growth. The business area’s operations: Employed 1996 Operating income ( ) rose to Head of BA since 1 Oct 2005 million (). The margin was .% Components and systems within medical (.). technology and pharmaceuticals Financial highlights: 2012 2011 Operations within packaging for pharma- Components and systems for medical tech- Sales, SEKm 1,159 917 ceuticals and dietary supplements expanded nology and pharmaceutical customers are Operating profit (EBITA), SEKm 133 110 in April with the acquisition of the Brit- the biggest operational area within Nolato EBITA margin, % 11.5 12.0 ish company Cope Allman Jaycare. This gave Medical. This includes development and Average number of employees 932 719 Nolato Medical access to a greater number of production for customers within fields such Customer offering: important pharmaceutical customers and a as diabetes treatment, drug delivery, asthma Development and manufacturing of polymer strong position in the British market, while at treatment, cardiology, medical analysis/diag- components and systems for medical technol- the same time enhancing its customer o er- nostics and home healthcare. These opera- ogy and pharmaceutical customers, as well as plastic pharmaceutical packaging. ing with new packaging types and production tions require in-depth insight into the specif- technologies. ic circumstances that govern the customers’ Geographic information: The integration of the acquired compa- needs. Sound expertise and understanding of Development, production and sales in Sweden, the UK, Hungary, the USA and China. Sales offic- ny, which was been renamed Nolato Jaycare, complex medical processes, quality assurance es in Germany, France and the Czech Republic. has gone well and according to plan. Fur- and risk analysis are crucial for success in this ther information about the acquisition can be market. Success factors: Medical understanding, broad technological found in note on page . Developing products for medical technolo- offering, global production, robust quality and An expansion of the Hungarian plant was gy and pharmaceutical customers is normally development expertise. completed during the year, and production an extremely time-consuming process which Customers include: began in the fourth quarter. The , m lasts for several years. On the other hand, the AstraZeneca, Boston Scientific, Coloplast, Gambro, Novo Nordisk, Takeda, Medtronic. Competitors include: Bespak/Consort, Carclo, Gerresheimer, PhillipsMedisize, Nypro, Rexam, West Pharmaceuticals. Volatility: Low. Steady market growth. Long-term growth potential. Product life cycle: Long. Market characteristics: Large, global medical technology and pharmaceutical companies. Long-term development work, strict authority requirements, strict requirements in terms of quality, safety and traceability. Market trends: Customers are reducing the number of suppliers. Increased globalisation of projects. Great- er focus on markets such as China and India. Increased outsourcing of production. The new clean room in the Hungarian factory. Nolato Medical Business Area 15

A micro component can weigh a thousandth of a gram.

Advanced moulding of extremely small medical technology components Micro injection moulding is a concept thousandth of a gram, and can be smaller insulin pumps and hearing aids. Custom- that Nolato Medical uses to manufacture than a millimetre. Examples include com- ers place extreme requirements on aspects extremely small medical technology components to attach pacemaker electrodes to such as dimensional accuracy and clean- ponents. A typical component can weigh a the heart, or components for infusion sets, ness. completed products have long product life for those who will use the medication, whilst cycles – in some cases almost twenty years. still being di cult for children to open. In the ■ Examples of products Nolato Medical has an extensive technologi- dietary supplements market, the design of cal o ering. This includes injection mould- the packaging – and hence the opportunity ing in plastic, TPE and silicone, assembly to profile a product against its competitors – and decoration of injection-moulded compo- plays an important role. nents, extrusion of medical tubing and latex Having previously focused on packag- dipping of products such as catheter balloons ing for products in solid form, the acquisi- for use in heart surgery. tion now means that the customer o ering Production is mainly carried out in clean includes packaging for all types of pharma- rooms, with extremely strict requirements ceuticals and dietary supplements: solids, liq- in terms of quality, safety and traceability. uids, creams and powders. Medical devices Development and production take place in Production is carried out in both hygienic Examples of therapy areas and products: Asth- Sweden, Hungary, the USA and China. environments and clean rooms. Development ma (inhalers, check valves), diabetes (insulin pens, infusion sets), hearing aids (seals, ear- and production take place in Sweden and the pieces), heart rhythm treatment (seals for pace- Pharmaceutical packaging UK. makers, cardiac anchors), dialysis (seals, con- This operational area comprises the develop- nectors), urology (urinary catheters, urodomes), ment, marketing and production of prima- surgery (catheter balloons, complete blood ry packaging for pharmaceuticals and die- The business area’s market purification equipment), analysis (allergy tests, tary supplements. The products include both pregnancy tests). standard products and tailor-made packaging Components and systems within medical to meet specific customer requirements. The technology and pharmaceuticals Pharmaceutical packaging standard products are mainly sold in the Nor- The market for medical technology products Primary plastic dic region, the UK and the rest of Europe. is growing globally by five to ten percent each packaging for solid medicines and die- Customers have strict requirements in year, and the market for pharmaceutical pack- tary supplements terms of the technical properties of this packaging by five to six percent. in capsule or tablet aging, such as airtightness, light transmission This growth is being steered by the grow- form. and anti-tampering protection. At the same ing population of the planet which, thanks time, the packaging should be easy to open to ever greater access to medication and 16 Nolato Medical Business Area

advanced care, is living longer and long- technology companies are therefore attaching ■ The business area’s units er. This is resulting in increased pressure on greater importance to simpler products that healthcare costs in most countries. Hospitals are tailored to suit these markets, and require Components and systems within medical are thus becoming emergency and diagno- their suppliers to be able to meet their wish- technology and pharmaceuticals: sis centres, while the actual care increasingly es for parallel production in various parts of takes place in the home. the world. Nolato Beijing Medical Beijing, China Since many medical technology products MD Jörgen Karlsson are thereby coming closer to the patients, it is Pharmaceutical packaging important that the products do not signify ill- Plastic packaging is the largest segment Nolato Contour Baldwin, Wisconsin, USA ness, instead having an attractive design and within the pharmaceutical packaging sec- MD Barry Grant well thought-out functions. tor, accounting for around a third of the The products have to be used by people entire market. Manufacturers are also chang- Nolato Hungary who are not healthcare experts, which also ing from glass packaging to plastic packag- Mosonmagyaróvár, Hungary MD Johan Arvidsson means higher design complexity with, for ing, since plastic o ers advantages in terms instance, integrated electronics. This places of reduced sound level and the risk of glass Nolato MediTech greater requirements on manufacturers, but being broken during production, distribution Hörby and Lomma, Sweden also creates opportunities for suppliers with and use, as well as lower energy consumption MD Johan Iveberg a high degree of technical expertise – like during production and distribution. Nolato MediTor Nolato – to broaden their business by o ering Generic manufacturers are growing more Torekov, Sweden customers additional support from develop- quickly than original pharmaceutical compa- MD Anders Ekberg ment to finished product. nies, as many important patents expire and Pharmaceutical packaging: As a result, manufacturers of medical tech- alternative manufacturing of previously pro- nology products are reducing the number of tected pharmaceuticals becomes possible. Nolato Cerbo suppliers used, leading to smaller, local com- Generic manufacturers often use the same Trollhättan, Sweden panies being eliminated or taken over, while type of packaging as the original manufac- MD Glenn Svedberg larger, global suppliers have the opportunity turer, since this gives a quicker route to mar- Nolato Jaycare to advance their market positions. Medical ket. The technical and quality requirements Portsmouth & Newcastle, UK technology companies are also choosing to for packaging remain, while generic manufac- MD Glenn Svedberg outsource all or part of their production to a turers are most focused on costs. At the same greater extent, thereby freeing up resources time, growth within generic products leads to ■ Strategic objectives in order to concentrate on their core compe- the market becoming both broader and larger, tences. and this favours companies such as Nolato. 2007 – 2012 The mature markets in the USA and West- The large pharmaceutical manufactur- R Build a broad technology platform ern Europe are continuing to grow, although ers are constantly reviewing their processes, R Establish Nolato within medical today’s fastest growth in relative terms is seen resulting in flexible, regional manufacturing P “Div. 4 ¨ Champions League” in countries such as China and India. Medical units being set up to streamline logistics and P Global customers P Certification R Geographic expansion P Hungary P North America P China

2013 – £ Continued growth £ Secure Nolato Medical’s place in the “Champions League” £ Increase the proportion of system projects £ Continued geographic expansion – North America (acquisitions) – Asia/China (organic) – Western Europe (acquisitions)

Automatic high-speed assembly of medical technology component. Nolato Medical Business Area 17

shorten lead times, and to carry out regional adaptations. This development represents a threat for small, local packaging suppliers, Nolato Medical: five-year review but brings great opportunities for those sup- ■ Net sales full-year ■ Net sales quarter pliers who have the necessary resources to fol- SEKm SEKm low their customers out into the world. 1200 350 1000 300 800 250 200 600 Nolato’s market position 150 400 100 Components and systems within medical 200 50 0 0 technology and pharmaceuticals 2008 2009 2010 2011 2012 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Today, Nolato Medical is a top-flight player, with an excellent position in Northern Europe, North America and China. Nolato ■ Operating profit (EBITA) full-year ■ Operating profit (EBITA) quarter Medical boasts a world-leading position in SEKm SEKm 140 terms of both liquid silicone injection mould- 40 120 35 ing and the production of catheter balloons. 100 30 80 25 20 60 Pharmaceutical packaging 15 40 In terms of packaging for pharmaceuti- 10 20 5 cals and dietary supplements, Nolato Medi- 0 0 cal now commands a leading position in the 2008 2009 2010 2011 2012 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Scandinavian and British markets. The share of exports is greater than %, with the rest of Europe being the most important market. ■ EBITA margin full-year ■ EBITA margin quarter % % Nolato Medical is one of only a few suppliers 20 20 in Europe with a comprehensive plastic pack- 16 16 aging o ering. 12 12

8 8 Continued development 4 4 Nolato Medical is positioned for further 0 0 2008 2009 2010 2011 2012 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 growth, both organically and through acquisitions.

Components and systems within medical ■ Investments ■ Average number of employees SEKm technology and pharmaceuticals 80 1000

The geographic platform will continue to be 800 60 reinforced by expanding production in low- 600 cost countries and through further expan- 40 400 sion and acquisitions in Western Europe and 20 200 North America. 0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Pharmaceutical packaging Affecting cash ﬂow, excluding acquisitions and disposals. The integration of the British acquisition is continuing, with investment in new machin- ■ Share of Group’s ■ Share of Group’s ery and continuous improvements within the net sales operating proﬁt (EBITA) framework of lean manufacturing, as well % % as coordinating and strengthening the joint 100 100 product platform, Nolato Medical Pharma 80 80 Packaging. The product o ering is constantly 60 60 being expanded with new, user-friendly and 40 40 safe packaging for pharmaceuticals and die- 20 20 ■ tary supplements. 0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 18 Nolato Telecom Business Area

Nolato Telecom Successful start-ups and strong growth

Nolato Telecom reported very strong growth ence (EMI), operations in Beijing have been ■ Nolato Telecom in brief during . Sales rose by % to , expanded in order to be able to deal with million (). Adjusted for currencies, sales large shielding projects, with project start-ups Head of Business Area: rose by %. New customer project start- in Sweden and volume production in China. Jörgen Karlsson Born in 1965 ups have been carried out as planned, and are Employed 1995 gradually replacing the older product port- Head of BA since 1 March 2009 folio. Demand for the new products has been The business area’s operations: strong. Financial highlights: 2012 2011 Operating income ( ) rose to Components and subsystems Sales, SEKm 1,548 935 million (). The margin grew to .% for mobile phones Operating profit (EBITA), SEKm 96 11 (.). The renewed product portfolio during This is the biggest operational area within EBITA margin, % 6.2 1.2 the year, combined with high and relatively Nolato Telecom. It includes the development Average number of employees 6,741 4,052 stable capacity utilisation from the second and production of complete mechanical mod- Customer offering: quarter onwards, have improved the margin. ules and specialist components such as design Design, development and manufacturing of In September, Nolato Telecom was named elements, logos and speaker and microphone components and subsystems for mobile phones, Sony Mobile Communications’ best mechan- protection. and products and systems for EMI shielding of electronics. ical supplier, as “a stable, reliable partner In highly simplified terms, a mechani- which provides excellent support in technol- cal module can be described as the parts of a Geographic information: ogy, quality, cost and deliveries”. mobile phone that a user can see and touch, Development, production and sales in China, Sweden and Malaysia. Sales and technology Within the field of electromagnetic interfer- apart from the screen, and certain internal offices in the USA and India. Success factors: Creative development work, cutting-edge technology, advanced project management, fast production start-ups and high productivity. Customers include: Alcatel-Lucent, BlackBerry, Ericsson, Huawei, Motorola, Nokia, Nokia Siemens Networks, Sony Mobile Communications, Xiaomi. Competitors include: BYD, Chomerics, Chiyoda, Foxconn, Hi-P, Jabil Green Point, Laird, Lite On Mobile, Nypro, Worldmark. Volatility: High. Project-based operations. Product life cycle: Short. Market characteristics: A few large, global companies. These customers have high technological demands, extremely short development times and quick production start-ups. Market trends: Continued high importance of cosmetic effects and unique design solutions, as well as specialist functions such as water resistance. The phy- sical size of mobile phones is growing. Greater need for EMI shielding. Injection moulding of a mobile phone component. Nolato Telecom Business Area 19

Nolato’s gaskets shield electronics against EMI.

Special gaskets protect the mobile phone networks against EMI Today, electronic equipment is every- term for this is EMI, or electromagnetic both shield the electronics against EMI where. This means a growing risk of elec- interference. To prevent EMI, for example and keep out dirt and moisture from these tronics causing or suering from interfer- in mobile network base stations, Nolato extremely exposed electronic units at the ence with other electronics. The technical has developed various gaskets, which tops of antenna masts. components. During the mobile phone manu- cation solutions and the production of the facturer’s final assembly, the mechanical mod- shielding material are carried out in Sweden. ■ Examples of products ule is combined with the screen, circuit board, Shielding production under Nolato’s own Components and subsys- battery, antennas and software to form a com- management takes place in Sweden, China tems for mobile phones plete phone. and Malaysia. Injection-moulded, painted These operations feature intensive product and decorated components development, extremely short lead times and for mobile phones, in cer- short product life spans. This places tough The business area’s market tain cases integrated with demands on Nolato Telecom’s technology, touchscreens and other project management and ability to adapt pro- In recent years, the playing field for compo- electronics (“mechanical duction resources quickly. nents and system products for mobile phones modules”). Creative material and surface design A global project management organisation has been reshaped by the emergence of the with significant cosmetic enables Nolato Telecom to work closely with smartphone. The traditional mobile phone and haptic content. its customers, often on-site at their develop- manufacturers still have control over tech- Small, designed adhe- ment centres around the world. nological development, but companies such sive components with Production takes place in Beijing and Shen- as Google and Microsoft are attempting to mechanical and/or zhen, China. launch their own products. cosmetic functions, Mobile phones are now multifunctional such as logos, speaker grilles and three- EMI shielding devices, featuring cameras, integrated GPS, dimensional design elements. This area involves developing process solu- easy-to-use MP players, large colour screens, tions and material solutions for shielding high battery capacity, low weight and high electronics against electromagnetic interfer- processing capacity to cope with a wealth of ence (EMI). The products are used in appli- apps. They can also be used to make phone cations such as mobile phone network base calls. stations. After a period when mobile phones became The business model is mainly based on smaller and smaller, the new emphasis on licensing the application process and the sale multifunctional devices has meant that the EMI shielding of materials and equipment to local agents, trend is now returning towards larger mobile Process and material solutions for shielding primarily in Asia and India. phones. Since the front consists mainly of a electronics against electromagnetic interference (EMI). The development of technology and appli- large screen, manufacturers’ opportunities for 20 Nolato Telecom Business Area

creating a distinct identity are limited. Crea- production of products within the high-end ■ The business area’s units tive uniqueness when selecting materials and segment. As such, we are less dependent on design e ects has therefore become increas- the overall market trend and more depend- Nolato Beijing ingly important. ent on how the mobile phone projects we are Beijing, China At the same time, technological develop- involved in sell to the end-consumer. MD Jörgen Karlsson ments are imposing ever stricter require- A large proportion of the volumes within Lövepac Converting ments on aspects such as the functionality of the mobile phone sector is dealt with by a few Beijing, China the antennas. G/LTE, which more and more vertical integrators, which can o er a global Shenzhen, China phones now support, require improved anten- presence, a comprehensive technology o er- Chennai, India na functionality for fast data transfer. A growing, low production costs and resources for MD Dan Wong ing number of antennas are also required to producing extremely large volumes. Nolato Silikonteknik deal with di erent frequency bands and com- In comparison with these, Nolato Tele- Hallsberg, Sweden munication technologies, and so the trend is com is a small supplier, with a share of a few Beijing, China heading towards applying invisible antennas percent of the total market. Our niche is the Kuala Lumpur, Malaysia MD Anders Ericsson to the reverse of the phone. upper segment of the market. We di erentiate In the near future, it is entirely possible that ourselves through technological cutting-edge mobile phones – or multifunctional devices expertise within the design, development and ■ Strategic objectives that can also be used to make phone calls – production of visible components for high- will have the highest processing capacity of all end phones, where customers place extremely 2007 – 2012 devices in a normal household. Phones will be high requirements on creative design, materi- R Establish a strong foothold used to control and monitor other equipment, als, appearance and feel. on important markets such as TVs, fridges, heating, door locks and Nolato Telecom is regarded by its custom- P Beijing, China P Shenzhen, China alarms. ers as a highly competent partner within this P Chennai, India Since we carry our phones around with us segment, and is often awarded projects fea- R Increased competitiveness all the time, the requirements in terms of featuring advanced production technology and through specialist and niche thinking tures such as shock resistance and watertight- strict demands in terms of the cosmetic and R Own offering of ness will also increase. tactile performance of components. “productised” technologies EMI shielding 2013 – Nolato’s market position Within EMI shielding, Nolato Telecom occu- £ Organic growth pies a leading position as a supplier of sili- Components and subsystems cone-based shielding for telecommunications. £ Extended customer base for mobile phones Shielding is a ﬁeld that is constantly grow- £ Technology and project management – Own niche technologies Today, Nolato is a niche player in the mobile ing as a result of the sharp increase in the – Project management and ramp-ups phone market, with a high degree of exper- number of units communicating with the rest £ Further development of the shielding tise relating to the design, development and of the world. Where once it was mainly peo- business (EMI) – New markets – Acquisitions

Shielding operations in Beijing have been expanded to be able to deal with large projects. Nolato Telecom Business Area 21

ple who talked with each other via mobile phones, it is now very common for machines and equipment to provide information about Nolato Telecom: ﬁve-year review their status or to be controlled remotely via ■ Net sales full-year ■ Net sales quarter the mobile phone network. Every such unit SEKm SEKm requires some form of shielding for electro- 1600 500 400 magnetic compatibility, so that these units 1200 can be close to each other without causing or 300 800 su ering from interference. 200

Shielding is also required in many other 400 100 areas, for example in a modern car, in order 0 0 for the large amount of electronics to be able 2008 2009 2010 2011 2012 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 to work together.

■ Operating profit (EBITA) full-year ■ Operating profit (EBITA) quarter Continued development SEKm SEKm 140 40 120 Components and subsystems 100 30 for mobile phones 80 20 Within components and subsystems for 60 mobile phones, Nolato Telecom will con- 40 10 20 tinue to focus on high-end phones with high 0 0 requirements in terms of creative design, 2008 2009 2010 2011 2012 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 materials, appearance and feel. This requires both continuous development of our own technologies for advanced surface treatment ■ EBITA margin full-year ■ EBITA margin quarter % % and the opportunity to keep introducing new 10 10 and interesting design solutions that our cus- 8 8 tomers find attractive. 6 6 EMI shielding 4 4 Within the shielding area, operations will be 2 2 further expanded to include customer sectors 0 0 other than telecommunications. The aim is 2008 2009 2010 2011 2012 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 to become a total supplier of shielding solutions. ■ ■ Investments ■ Average number of employees SEKm 80 7000 6000 60 5000 4000 40 3000 2000 20 1000 0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Affecting cash flow, excluding acquisitions and disposals.

■ Share of Group’s ■ Share of Group’s net sales operating proﬁt (EBITA) % % 100 100

80 80

60 60

40 40

20 20

0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 22 Nolato Industrial Business Area

Nolato Industrial Market position gains and highly productive operations

Nolato Industrial’s sales rose by % to for production in China, particularly to sup- ■ Nolato Industrial in brief , million (,). Adjusted for currencies, port existing European customers who have sales rose by %. Market position gains, new started their own production in Asia. Produc- Head of Business Area: products and healthy demand led to addition- tion will take place in connection with one Johan Arvidsson* Born in 1969 al sales. of Nolato’s existing production units in Bei- Employed 1994 Operating profit ( ) totalled jing. Certification of this production unit in Head of BA since 15 Oct 2012 million (), with a strong margin of accordance with the automotive industry’s .% (.). ISO/TS standard has commenced. Financial highlights: 2012 2011 The production unit that was opened in Sales, SEKm 1,170 1,129 Romania in , focusing mainly on pro- Operating profit (EBITA), SEKm 105 102 duction within the hygiene sector, has shown The business area’s operations EBITA margin, % 9.0 9.0 good growth. The capacity of the Hungar- Average number of employees 743 720 ian unit was expanded during the year to meet Nolato Industrial’s business concept is based Customer offering: increased demand. on strong, specialist companies – six in Swe- Development and manufacturing of components Nolato Industrial has identified a demand den, one in Hungary and one in Romania – and product systems in plastic, TPE and rubber for customers in the automotive industry, hygiene, packaging, gardening/forestry, white goods and other selected industrial segments. Geographic information: Development, production and sales in Sweden, Hungary and Romania. Success factors: Technology, project management and productivity. Customers include: Atlas Copco, Brose, Haldex, Husqvarna, Lindab, MCT Brattberg, Sanitec, Scania, SKF, Volvo, Volvo Car. Competitors include: Euroform, KB Components, Nypro, Plastunion, Talent Plastics. Volatility: Medium. Follows the Northern European industrial business cycle. Product life cycle: Medium/long. Market characteristics: Fragmented and diversified, with a large number of customers and a large number of suppliers. Market trends: Global customers are reducing their number of suppliers and outsourcing an increasing amount of their product development and project management to suppliers. Plastic is gaining market share over metal for weight-related and environmental reasons. Production of an automotive component. * Hans Porat until 14 Oct 2012 Nolato Industrial Business Area 23

The ﬂush panels are injection moulded, surface treated and assembled.

Straight to the customer’s customer A wall-mounted toilet is flushed by press- and colours. Nolato has been involved in surface treated, laser printed and assem- ing buttons on a flush panel that is set into developing flush panels for Sanitec since bled. They are then delivered as a finished the wall above the toilet. The flush panel , and produces panels for brands product, packaged for retail and ready for has a complex construction, and is pro- such as Ifö, Ido, Kolo, Twyford, Allia and the fitter to mount on the wall in the end- duced in many dierent versions, finishes Selles. The panels are injection moulded, customer’s bathroom.

which create business opportunities both Operations are aimed mainly at larger indus- individually and in cooperation with each trial companies which attach great impor- ■ Examples of products other. tance to suppliers’ capacity for turnkey solu- The customer o ering includes develop- tions in the form of support in development Automotive industry ment and production using both soft and work, e cient production, high capacity, the Gaskets for engines and exhaust systems, hard polymer materials, as well as combina- right quality and reliable deliveries. interior fittings, motor tions of these and other materials, such as components, battery metals. Automotive industry boxes, damping, fuel A high degree of technological expertise, The automotive industry, to which Nolato hoses. strong project management and highly e - Industrial makes both direct deliveries and Hygiene, packaging, garden/forestry cient production provide good conditions deliveries to tier-one suppliers, accounts for and white goods for working closely alongside customers in around a third of the business area’s sales. Components for microwave ovens, components connection with development and produc- Products include both interior fittings and for chainsaws (complete recoil housing, filler tion solutions. Through continuous improve- technical components for engines and engine caps, intake pipes in ments and a sharp focus on e ective process- compartments. rubber/metal, air fil- ter holders, gasket, es, reducing reject levels, shorter lead times etc.), flush buttons and identifying new solutions, we ensure that Hygiene, packaging, gardening/forestry and complete flush- the right conditions are created for good com- and white goods ing mechanisms for toilets, transportation petitiveness. This includes large, global industrial compa- crates for the clothing The combined strength of the business area nies with continuous and comprehensive pur- industry. is also important. Joint purchasing, distrib- chasing operations, high volumes and long uting resources between di erent units and product runs. Customers’ purchasing opera- Other industries the ability to coordinate resources for large tions are often integrated into larger, interna- High-voltage adapters, water membranes, customers or groups of customers all help to tional organisations. ball retainers and storage seals for ball bear- boost Nolato Industrial’s competitiveness. ings, armrests for office chairs, con- At the same time, it is extremely important to Other industries veyor belts, gaskets safeguard each individual company’s entre- This area primarily includes customers locat- for ventilation ducts, preneurship, since this is where business is ed close to the company in question. Here, transportation pro- generated and, together with accurate esti- too, there are large global customers with sig- tection for rock drills. mates, profitability is created. nificant volumes, as well as companies that 24 Nolato Industrial Business Area

require smaller volumes. Customer relation- production in Sweden fell by .% and auto- ■ The business area’s units ships tend to be long term, featuring joint motive production by . % compared with technological development and ongoing pro- . Nolato Gota duction. The market trend is heading towards Götene, Sweden increased use of plastic as a replacement for MD Peter Holterberg metal. This is particularly true in the automo- Nolato Hertila The business area’s market tive industry, where reduced fuel consump- Åstorp, Sweden tion and hence lower vehicle weight is of great MD Håkan Hillqvist The European market for conversion of pol- importance. Low environmental impact is Nolato Hungary ymer products is fragmented, consisting of also an increasingly important factor in the Mosonmagyaróvár, Hungary almost , companies with combined sales choice of materials and processes. MD Johan Arvidsson of over EUR billion. The typical company The desire for earlier and more in-depth Nolato Lövepac is family-owned, turning over SEK – mil- involvement in product development is lead- Skånes Fagerhult, Sweden lion per year and operating in its local market. ing to customers reducing the number of sup- MD Henrik Enoksson With the exception of the packaging industry, pliers. This benefits companies like Nolato, Nolato Plastteknik there has been no widespread consolidation, which have significant resources and a strong Göteborg, Sweden often due to the local nature of business. The financial position, and which can meet cus- MD Magnus Hettne fact that business is often done locally is due tomers’ increasingly high expectations in Nolato Polymer to the fact that the products in this market are terms of development and technological Torekov & Ängelholm, Sweden normally fairly bulky, making them expensive o ering. MD Anders Willman to transport. The biggest risk in the Nordic market Nolato Romania The degree of di erentiation within the is that the larger customer companies will Negoiesti, Romania Nordic region is just as strong as elsewhere transfer their production to low-cost coun- MD Johan Arvidsson in Europe. There are, for example, over tries, looking for new, local suppliers there. manufacturers of polymer products in Swe- Nolato Sunne Sunne, Sweden den, of which two thirds have fewer than five MD Bo Norlin employees. Nolato’s market position Within plastic injection moulding, there are around thirty companies in Sweden with sales Nolato Industrial is the Swedish market lead- ■ Strategic objectives of more than SEK million. er, with a market share of around a quarter The total market contracted in . of the business carried out by supplier com- 2007 – 2012 According to Statistics Sweden, industrial panies with sales of over SEK million. All R Market share R Productivity R Cash flow

2013 – £ Market share £ Productivity £ Cash ﬂow £ Selective geographic expansion – alongside customers – through selective acquisitions that bring new customers or technologies

Injection moulding of a chain saw component. Nolato Industrial Business Area 25

of Nolato’s companies are among the largest in the Swedish market, and overall Nolato Industrial is one of the very biggest players Nolato Industrial: five-year review within its sector in the Nordic region. ■ Net sales full-year ■ Net sales quarter In Central Europe, Nolato Industrial has a SEKm SEKm strong position as a quality supplier of prod- 1200 350 ucts, particularly in the hygiene sector. 1000 300 800 250 The size and stability of the companies 200 600 within Nolato Industrial, together with their 150 400 high levels of expertise and e ciency and 100 200 their dedicated employees, help to create a 50 0 0 strong market position. A high degree of 2008 2009 2010 2011 2012 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 automation and production e ciency means that Nolato Industrial’s competitiveness is constantly improving. ■ Operating profit (EBITA) full-year ■ Operating profit (EBITA) quarter SEKm SEKm 120 30 Continued development 100 25 80 20 60 15 Nolato Industrial will maintain its strong 40 10 commitment to the Nordic and Central Euro- 20 5 pean markets, but will also be able to o er 0 0 2008 2009 2010 2011 2012 customers a certain amount of production Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 in China in /. There will be a focus on continuing to develop professionalism, project management, productivity and customer- ■ EBITA margin full-year ■ EBITA margin quarter % % oriented technology. 12 12 The business area’s growth will mainly take 10 10 place organically, but the acquisition of com- 8 8 panies with unique technological expertise or 6 6 with a strong position within a particular cus- 4 4 tomer segment may also be of interest. ■ 2 2 0 0 2008 2009 2010 2011 2012 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12

■ Investments ■ Average number of employees SEKm 80 800

60 600

40 400

20 200

0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Affecting cash ﬂow, excluding acquisitions and disposals.

■ Share of Group’s ■ Share of Group’s net sales operating proﬁt (EBITA) % % 100 100

80 80

60 60

40 40

20 20

0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 26 Sustainability/CSR

Sustainable development creates opportunities

Nolato has a long tradition of responsible ing Initiative (GRI), we have access to e ective ■ 2012 in brief: sustainability/CSR business, and one of our Basic Principles is tools, enabling us to report in a reliable man- that e cient and profitable business opera- ner on the way we deal with issues relating to tions must be combined with ethics, responsi- ethics, responsibility and the environment. ■ Nolato Contour and Nolato Romania are bility and environmental awareness. ■ Certified environmental (ISO ) certified in accordance with ISO 14001. Work begins on certifying Nolato Jaycare’s two Right from the start, we have therefore and working environment (OHSAS ) newly acquired units in the UK during 2013. taken a very down-to-earth approach to the management systems are a natural element issues that are now combined under the con- of our systematic approach to continuous ■ An Employee Care Programme is launched cepts of sustainable development, social improvements. We also apply the guidelines at Nolato Beijing in China. responsibility and CSR. It is obvious to us for social responsibility (ISO ). that the company should be a good neighbour ■ By being open in our communication, ■ Nolato Beijing receives an award for its and a good global citizen, and that we should we make it easier for our customers, investors safe working environment. take responsibility for what we do and always and other stakeholders to follow up on their ■ Disabled employees are hired at Nolato apply sound business ethics. requirements and to evaluate our work. Hungary. With time, the original, natural ideas with- ■ By working with sustainable develop- in Nolato – of basing our operations on pro- ment, we can identify and create business ■ Nolato Hungary receives an award for its fessionalism, good organisation and respon- opportunities, for example through environ- excellent working environment from the UN’s sibility – have been developed into a carefully mental adaptations for our products. European Agency for Safety and Health at thought-out strategy for sustainability. This ■ By making our employees aware of Work and the Hungarian working environment authorities. strategy is based on the fact that we are fully Nolato’s Code of Conduct, they receive clear convinced that a future-oriented, responsible signals of the significance of our common ■ A whistleblowing system is introduced approach is not only necessary from a respon- values. to enable to employees to report any ethical sibility perspective, but also creates oppor- ■ By working strategically and with clear or financial irregularities without the risk of tunities and thus benefits for our customers, Group targets, we are better able to achieve reprisals. ourselves and our owners: our ambitions within sustainable develop- ■ ■ The process of phasing out hazardous By making e cient use of materi- ment and CSR. chemicals continues. als, energy and water, we can achieve positive e ects for both the environment and the ■ Robur approves Nolato’s shares for invest- Group’s competitiveness. ments in its sustainability funds. ■ By dealing with environmental, working environment and social risks in a system- Climate targets ■ For the third year running, Nolato is awar- atic manner, the Group’s risks are reduced ded the highest grading in the Swedish busi- ISO 26000 ness publication Veckans Affärer’s Sustaina- and these activities contribute towards a safer Sustainability targets ble Portfolio. workplace. ■ By being signed up to the UN’s Global OHSAS 18001  Read more in our sustainability report Compact and reporting on our sustainability Sustainability reporting at www.nolato.com/sustainability work in accordance with the Global Report- UN Global Compact Code of Conduct Environmental policy ISO 14001 Environmental legislation Working environment legislation Responsibility and good organisation

1938 1950 1990 2000 2010 2012 Sustainability/CSR 27

Integration with Target-oriented activities business operations ■ The Nolato Spirit

Nolato has ﬁve fundamental value and policy Openness and dialogue documents, which convey the values, prin- with stakeholders ciples and attitudes that make up our core Nolato’s Compliance with legislation values. sustainability Nolato’s Basic Principles strategy The Basic Principles make up the common values platform for all Group operations, and International initiatives are thus the guiding force for all Nolato employees, regardless of where in the world or in which part of the organisation they may work.

Analysing and Systematic work and Nolato’s Code of Conduct preventing risks management systems The Code of Conduct formalises the content of the Basic Principles in terms of our ethical and compassionate principles.

Nolato’s Environmental Policy Our sustainability strategy The Environmental Policy formalises the guidelines for regard for the environment in The strategy for our sustainability work is place at all manufacturing units within the the Basic Principles. based on the following cornerstones: Group. The first unit was certified in . Nolato’s Quality Policy The certification requirements also apply to The Quality Policy outlines the underlying fo- Integration with business operations new companies acquired by the Group. In cus of our quality work. Sustainability issues are integrated into Nola- , Nolato Contour in the USA and Nolato to’s way of working. This involves areas such Romania were both certified. Apart from the Nolato’s Information Policy The Information Policy governs the dissemina- as investments, monitoring, external com- two British units, which were acquired in tion of information by the Group, including in munication, company acquisitions, crisis and which are intended to be certified in , relation to listing requirements. and risk management, procedures, report- all our own production units are now certified. ing and training. We have a clear responsibil- A working environment management sys- ity for issues relating to the environment, the tem (OHSAS ) is in place at Nolato working environment, social responsibility Beijing, and the intention is that the system and ethics. This responsibility comes from the should be spread further within the Group. Board of Directors, and is allocated to Group We worked on the guidelines contained management and the management of the in the standard on social responsibility (ISO Group companies. ) in . This standard is based on sev- The Group’s overall Code of Conduct and en fundamental concepts, and provides volun- related documents must be adhered to. How- tary guidelines for what an organisation can ever, in accordance with Nolato’s decentral- do to contribute towards a sustainable future. ised organisation, each individual unit has a Our separate sustainability report contains relatively high degree of freedom to decide an overall self-declaration of how Nolato for themselves how to implement this work in complies with ISO . everyday operations. The five value and policy documents are com- Analysing and preventing risks piled in the booklet the Nolato Spirit, which is available in the languages of the countries Compliance with legislation Our sustainability strategy also includes where Nolato operates. One obvious element of our sustainability managing risks in a systematic manner. Reg- In workplace meetings and new staff ap- strategy involves complying with environ- ular risk assessments are carried out with- pointments, the Nolato Spirit is actively used as an aid to make all employees aware of the mental and working environment legislation, in Nolato in areas relating to sustainable core values and guidelines applicable to their and evaluating how future legislation could development, and these risks are taken into work at Nolato. a ect our operations. During , there were account in connection with company acqui- no breaches of permits, conditions or any sitions. More information about sustainable  You can find the Nolato Spirit booklet other relevant environmental legislation. development risks can be found on page . at www.nolato.com/sustainability

Systematic work and International initiatives management systems Nolato has signed up to the UN’s ten prin- In the late s, Nolato decided that cer- ciples relating to the environment, human tiﬁed environmental management systems rights and anti-corruption measures (the in accordance with ISO should be in Global Compact) since . 28 Sustainability/CSR

We report on our work in an annual report to improving employees’ workplace satisfaction duced a whistleblowing system whereby the UN, which is integrated into our sustain- and assisting in the recruitment of qualified employees can report any irregularities they ability report. employees. notice without the risk of reprisals or pressure. The system was trialled at three of our Openness and dialogue with stakeholders Customer and supplier evaluations units in , and will be rolled out through- Openness and dialogue with stakeholders is The Group’s sustainable development tar- out the group in . part of our sustainable development strategy. gets include working with both customers The Group’s sustainability reporting meets and suppliers in connection with sustainable Continued work the requirements of GRI. In practice, this development issues. We understand that the journey towards com- means that strategy, dialogue with stakehold- During , around a third of the Group’s pletely sustainable development will be a long ers and a number of key ratios are reported in units were evaluated by customers, with good and time-consuming one, and that there are accordance with GRI’s guidelines at level B. results. We ourselves have evaluated around also a number of circumstances over which we of our suppliers in relation to the environ- have no control. However, within those areas Target-oriented activities ment and social responsibility. where we have influence, our sustainability In , we established long- and short-term work will continue unabated in accordance Group targets for sustainable development. Zero-tolerance on ethical issues with the Group’s overall strategy. The table on page provides an overview of Nolato takes a zero-tolerance approach to During , we will work with measures the main targets and the results achieved in bribery, corruption and cartel formation. We including the following: relation to these in -. Our sustain- therefore work continuously with control and ■ Energy e ciency and reduced environ- ability report contains a detailed account of monitoring of the methods used by the units mental impact. We are also introducing tight- our work in connection with these targets. within the Group to conduct business, by dis- er Group targets within these areas. Ahead of the - period, we are seminating and discussing our shared values ■ Improved resource e ciency, including tightening up our targets in relation to energy in the form of our Basic Principles, Code of through reduced waste. consumption and carbon dioxide emissions. Conduct and policies. ■ Making products more environmentally The new targets mean that both energy con- We pay particular attention to ethical friendly through the use of new materials and sumption and emissions will be reduced by issues in our relationships with our part- production processes. ten percent in relation to Nolato’s key ratios. ners. Standard business practice should be ■ Activities in relation to sustainable observed in each individual country, but if development and CSR within the Group’s A focus on CSR in China business methods do not comply with Nola- supplier chains. Many activities relating to sustainable devel- to’s Code of Conduct, we should refrain from ■ Introducing sustainability issues into opment and CSR were carried out at Nola- doing business or take alternative relevant the Group’s strategic work. to’s biggest unit in Beijing, China, during actions. ■ Stimulating the introduction of OHSAS . The work relating to the dedicated CSR We carry out annual evaluations within and further developing our work in group set up in has been developed, and this area, using UN Global Compact check- accordance with ISO . a number of practical improvements have lists. No code of conduct breaches have been ■ Continuing to train our employees on been implemented. identified. issues relating to people, the environment and An Employee Care Programme was estab- To further strengthen our control mecha- ethics. ■ lished in Beijing during , with the aim of nisms within this area, we have also intro- Sustainability/CSR 29

■ Key Group sustainability targets and outcome, 2010 – 2012

Environmental responsibility 2010 2011 2012 How things went

Reduced energy consumption See diagram below p Lower consumption in relation to sales, but more units and higher (MWh/SEK M sales) production increased overall consumption. Improved energy efﬁciency through measures relating to lighting, ventilation and equipment at most plants.

Reduced emissions of greenhouse gases See diagram below u More units and increased production resulted in higher emissions. Energy

(tonnes of CO2/SEK M sales) efﬁciency measures and installation of heat pumps reduced emissions.

Reduced weight of waste See diagram below q Increased production volumes, more plants and more developed re- (tonnes/SEK M sales) porting resulted in increased weight of waste. Measures to reduce waste have been carried out, but have not compensated for the increased amount of waste.

ISO 14001 introduced at all units 89 85 86 p Work has begun on introducing ISO 14001 at the newly acquired (% of total number of plants) Nolato Jaycare in the UK. To be completed during 2013.

Social responsibility

No infringements of human rights, discrimination 0 0 0 p Information and training in connection with the Nolato Spirit have or forced labour (number of cases) been carried out at most units. New employees are the main target group.

Minimise occupational accidents and work-related 44 28 64 q More accidents compared with 2011. It is positive that many pre- illnesses (cases with >1 day absence and cases per 0.006 0.005 0.007 ventive measures have been carried out, and systems for recording near employee) misses have been introduced at virtually all units.

Business partners and other stakeholders

Counteract bribery, corruption and cartel formation 0 0 0 p An internal evaluation regarding the prevention of bribery based on the (number of cases) UN Global Compact shows additional action to prevent corruption. Whistle- blowing system introduced within the Group.

Improved evaluation of suppliers’ sustainability 84/58 90/90 90/90 p Increased number of suppliers evaluated in relation to both the envi- work (% of number of plants carrying out environ- ronment and social responsibility. mental/social responsibility evaluations)

p Target achieved or positive trend for achieving target. u Unchanged situation. q Worsened situation.

■ Energy consumption ■ CO2 emissions ■ Waste GWh GWh/SEKm tonnes tonnes/SEKm tonnes tonnes/SEKm

175 0.07 70000 28 6000 3.0

150 0.06 60000 24 5000 2.5

125 0.05 50000 20 4000 2.0 100 0.04 40000 16 3000 1.5 75 0.03 30000 12 2000 1.0 50 0.02 20000 8 1000 0.5 25 0.01 10000 4

0 0.00 0 0 0 0.0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012

Total group energy consumption, GWh Group CO2 emissions, tonnes Group waste, tonnes Consumption divided by sales, GWh/SEKm Emissions divided by sales, tonnes/SEKm Waste divided by sales, tonnes/SEKm

 All Group targets are reported on in our detailed sustainability report (see www.nolato.com/sustainability). 30 Directors’ report

Directors’ report

Nolato is a high-tech developer and manu- for mobile phones, and products and systems Nolato Telecom’s sales rose percent to facturer of polymer products for leading for EMI shielding of electronics. , million (), of which onward sales customers working in fields such as medical Nolato Industrial develops and manufac- of components was million (). Adjust- technology, pharmaceuticals, hygiene, tele- tures components and product systems from ed for currency and acquisitions, sales rose by communications, the automotive industry, plastic, TPE and rubber for customers work- percent. Start-ups of new customer pro- white goods, gardening/forestry and furni- ing in the automotive industry, hygiene, pack- jects were implemented as planned and have ture. aging, gardening/forestry, white goods and gradually replaced the older product portfo- Nolato AB, which is the Parent Company other selected industrial segments. lio. Demand for the new products was strong. of the Group, is a limited company, corporate Operating profit ( ) rose to mil- identity number -, with its regis- Operations in 2012 lion (). The margin rose to . per- tered o ce in Torekov, Sweden. Its head o ce In , Group sales rose by percent to cent (.). Adjusted for a positive non-recur- address is Torekov, Sweden. , million (,). Adjusted for cur- ring item of million (), the margin was The Group’s operations take place with- rency and acquisitions, sales rose by per- . percent (.). The renewal of the product in subsidiaries which are wholly owned by cent. Consolidated operating profit ( ) portfolio during the year combined with high the Parent Company. In there were such was million (), equalling an and relatively stable capacity utilisation as of companies in Sweden, the UK (acquired in margin of . percent ( .). Adjusted for a the second quarter improved the margin. April ), Hungary, Romania, China, India, non-recurring item in the fourth quarter, the Nolato Industrial’s sales rose by percent Malaysia and the USA, and sales companies margin was . percent ( . ). Profit to , million (,). Adjusted for in France and Norway (net assets disposed of after tax increased to million (). currency, sales rose by percent. Advanced in July ). Earnings per share, basic and diluted, were market positions, new products and robust . (.). demand until the end of the third quarter Three business areas Nolato Medical’s sales increased to contributed to higher sales. From the end In order to ensure optimal conditions for spe- , million (), equalling percent of the third quarter, customer demand lost cialisation and close cooperation with cus- growth. Adjusted for currency and acquisi- momentum in a cyclical slowdown which the tomers, the Group is divided into three busi- tions, sales increased percent, which was in business area believes will persist during the ness areas: Nolato Medical, Nolato Telecom line with market growth. beginning of . and Nolato Industrial. Operating profit ( ) rose to Operating profit ( ) totalled Nolato Medical develops and manufac- million (). The margin was . per- million (), with a strong margin of tures polymer components and systems for cent (.). The margin was a ected by the . percent (.). customers working in medical technology and acquisition. The British unit acquired in the pharmaceuticals, as well as plastic pharma- spring is performing according to plan. The ceuticals packaging. extension of the Hungarian factory is com- Nolato Telecom designs, develops and plete and production started in the fourth manufactures components and subsystems quarter. Directors’ report 31

Comments on the consolidated previous year, other operating income con- income statement sisted mainly of non-recurring income for ■ Sales Nolato Telecom from a bankruptcy payment. SEKm Net sales 4000 Consolidated net sales for totalled Selling and administrative expenses 3500 , million (,) in , a rise of Selling and administrative expenses increased 3000 percent compared with . Adjusted compared to and amounted to 2500 for currency and acquisitions, sales rose by million ( ). These expenses consist of per- 2000 percent. sonnel costs and other costs associated with 1500 Nolato Medical continued to show healthy the sales organisation, and administrative 1000 growth, with sales rising by percent. functions. The selling expenses also include 500 Adjusted for currency and acquisitions, sales costs for amortisation of intangible assets 0 rose by percent. arising from acquisitions, which increased to 2008 2009 2010 2011 2012 In Sweden Outside Sweden Nolato Telecom’s sales rose percent, of million (). They comprise amortisa- which onward sales of components (touch- tion of so-called customer relationships that screens) amounted to million (). are assigned value in the acquisition analysis ■ Change in sales Adjusted for currency, sales increased by in connection with acquisitions. SEKm +21% percent. 4000 + 7% +2%

Nolato Industrial’s sales rose by percent. Operating profit 3500 Volume Structure Currency Adjusted for currency, sales rose by percent. Operating profit rose sharply to mil- Price 3000 Mix lion (). The increase is mainly due to a 2500 Gross profit strongly improved profit for Nolato Telecom, 2000 Gross profit was million but other business areas also improved their 1500 ( ) and rose mainly as an e ect of higher earnings from . 1000 sales. Gross profit is sales minus the cost of goods sold. The cost of goods sold consists Net financial income/expense 500 of production costs for materials and manu- Net financial income/expense was a ected 0 2011 2012 facturing salaries, as well as other produc- by higher financial expenses than in . tion expenses. As a percentage of sales, the The average debt level was higher, involv- ■ Operating profit (EBIT) gross margin was higher than in , chief- ing increased interest expenses, while net SEKm ly because of higher capacity utilisation and exchange rate di erences were – million hence improved profitability for Nolato Tele- (). Profit after net financial income/expense 300 com. was million (). 250

Total depreciation fell to million, 200 compared with million in . This Profit after tax 150 consisted mainly of depreciation of fixed Profit after tax was million (), assets in production, which is included in the with earnings per share of . (.). 100 cost of goods sold in the income statement at The e ective tax rate was percent (). The 50 million (). The reduction in depre- lower tax rate was mainly due to non-recur- 0 ciation was mainly due to the impairment of ring e ects connected with a forthcoming tax 2008 2009 2010 2011 2012 fixed assets in in the amount of reduction in Sweden. million at Nolato Telecom.

Other operating income Other operating income consists mainly of a non-recurring item in the fourth quarter for Nolato Telecom of million. In the 32 Directors’ report

Comments on the turn of the year was percent (). The ■ Return the consolidated balance sheet return on shareholders’ equity was . per- % cent (.).

25 Assets Total assets stood at , million (,). Liabilities 20 Fixed assets increased mainly because of Accounts payable rose compared with 15 higher intangible assets from the acquisition as a result of higher sales. The average total of Cope Allman Jaycare. working capital requirement in relation to 10 Current assets in the form of inventories sales was . percent (.). Despite the higher 5 and accounts receivable increased compared capital employed, the improvement in earn-

0 with as a result of higher sales. ings brought about a sharp increase in return 2008 2009 2010 2011 2012 Cash and bank balances increased to on capital employed to . percent (.). Capital employed Shareholders’ equity million (). The strong cash flow, main- Interest-bearing liabilities increased, Total capital ly in the fourth quarter, increased cash and amounting to million ( ) through cash equivalents. loan financing chiefly of the acquisition. ■ Equity/assets ratio Interest-bearing assets increased at the same % Shareholders’ equity time to million (), so net debt was Shareholders’ equity amounted to relatively unchanged, at million (). 60 , million (,). Shareholders’ equity Nolato has loan agreements of 50 increased as a result of comprehensive income million, of which million matures in 40 for of million including curren- August and million at the turn

30 cy e ects. Dividends in the amount of of the year / . Of these amounts, million were paid out, thus reducing share- million was unutilised at the close of 20 holders’ equity. The equity/assets ratio at . 10

0 2008 2009 2010 2011 2012 ■ Financial position SEK million 2012 2011 Interest-bearing liabilities, credit institutions 255 113 Interest-bearing pension liabilities 95 93 Total borrowings 350 206 Cash and bank – 272 – 124 Financial net debt 78 82 Working capital 93 169 As a percentage of sales (avg.) (%) 3.4 5.3 Capital employed 1,555 1,357 Return on capital employed (avg.) (%) 19.5 13.9 Shareholders’ equity 1,205 1,151 Return on shareholders’ equity (avg.) (%) 17.1 11.3 Directors’ report 33

Comments on investments made consisted mainly of technol- the consolidated cash flow statement ogy initiatives and investments in machinery ■ Cash flow after investments replacement in China. Nolato Industrial has Cash flow from made investments in further machinery capac- SEKm operating activities ity and for new projects. The investments were 350 Cash flow before investments and disposals made in Sweden and Hungary. 300 rose sharply to million ( ), a ect- 250 ed mainly by the upbeat earnings trend and 200 ■ Investments SEKm 2012 2011 a reduced working capital requirement. The 150 Capitalised developm. expenditure 0 3 change in working capital was a positive 100 Tenancy rights 2 0 million (–). Reduced activity due to 50 Buildings and land 21 13 the Christmas holiday had a positive e ect on Machinery and equipment 77 60 0 2008 2009 2010 2011 2012 the working capital requirement. Construction in progress 59 58 Excluding aquisitions and disposals Total investments 159 134 Cash flow from investment activities Affecting cash flow, excluding acquisitions and disposals ■ Investments Net investments a ecting cash flow totalled SEKm

million (), of which the acquisition Cash flow after 175 of Cope Allman Jaycare accounted for investment activities 150 million. Excluding acquisitions, cash flow after invest- 125 In , gross investments in property, plant ments amounted to million (), and 100 and equipment were million (), including acquisitions to million (). 75 and million () in intangible fixed assets. 50 The investments in property, plant and equip- Cash flow from 25 ment chiefly comprised machinery and equip- financing activities 0 ment, but also buildings and construction in Financing activities describe the Group’s 2008 2009 2010 2011 2012 progress. financing and dividends to shareholders, and Excluding aquisitions and disposals Investments a ecting cash flow exclud- totalled a net amount of million (–). ing acquisitions and disposals are distributed This consists of net borrowings of mil- ■ Net debt across the Group’s business areas as follows: lion (– amortised loans) and dividends paid million () for Nolato Medical, totalling million (). Borrowings SEKm million () for Nolato Telecom and mainly financed the acquisition. 125 million ( ) for Nolato Industrial. 100 At Nolato Medical, investments have chiefly comprised further machinery capacity in 75

Sweden and Hungary, and the completion 50 of the factory extension in Hungary. Nolato Telecom’s investments were low in . The 25

0 2008 2009 2010 2011 2012 34 Directors’ report

The Parent Company Environmental issues ■ Average no. employees The Parent Company, Nolato AB, is a holding The Group’s signiﬁcant environmental issues 9000 company which carries out joint Group man- are the use of energy, raw materials and chem- 8000 agement functions and ﬁnancial and account- icals, emissions to air and water, and waste.

7000 ing functions. Systematic work is carried out in the Group

6000 Sales totalled SEK million (). Proﬁt to reduce environmental impact and environ-

5000 after financial income and expense was SEK mental risks, and to improve resource e - million (). The poorer outcome is mainly ciency. 4000 due to lower dividends from subsidiaries. The majority of production units are certi- 3000 fied according to ISO and external envi- 2000 Employee information ronmental audits were carried out during the 1000 The average number of employees at Nolato year at all certified units. The Group reports 0 2008 2009 2010 2011 2012 in was , (, ), of whom () on sustainability performance according to were in the Nordic region, () in the GRI guidelines level B, and has endorsed the rest of Europe, () in the USA and , UN Global Compact. ■ Employees by business area 2012 (,) in Asia. percent () of employees In Sweden, the Group carries out opera- Average number of employees worked outside the Nordic region. per- tions with notification obligations in accord-

Nolato Medical 932 cent () of the Group’s total employees were ance with the Swedish Environmental Code Nolato Industrial 743 women. At the European units, the propor- at all units. One of the units plans to renew its tion of female sta was percent (), notification in . percent () at the Asian units, and percent The Group’s units outside Sweden also () in the USA. require permits or are covered by similar Equality work is carried out on a decentral- requirements in accordance with environmen- ised basis at each unit, in accordance with the tal legislation in the country in question. At individual companies’ equality plans. one of the units in Beijing, China, an application will be filed for an environmental permit for extended painting operations. At some Nolato Telecom 6,741 Social responsibility other units outside Sweden, certain environ- At the end of the year, Nolato had production mental permits will be routinely updated in ■ Employees by country 2012 units in Sweden, the UK, Hungary, Romania, . Average China, Malaysia and the USA. Sales from operations with permit require- USA 159 All of the units except the one in Malaysia ments and notification obligations make up Other 180 UK 205 are wholly owned by Nolato, which enables all of Nolato’s net sales. Hungary 468 China 6,545 a Group-wide way of dealing with matters In most cases, regular reports are submit- relating to the environment, ethics and social ted to the environmental authorities, and the Sweden 864 responsibility. In Malaysia, production is con- supervisory authorities carry out inspections. tracted from a collaboration partner and is No breaches of environmental legislation subject to the same requirements as the Com- were registered in . Neither were there pany’s own units. any complaints from neighbours or other Pursuant to Nolato’s Code of Conduct, all stakeholders. employees have the right to be represented by A more detailed account of Nolato’s sus- trade unions, and to collective agreements. tainability work can be found on pages –. In Sweden and China, the majority of Nolato’s complete sustainability report is employees are covered by collective agree- available at www.nolato.se/hallbarhet. ments. At the units in other countries, there are no unions or collective agreements, and this reflects a normal situation in these countries. In order to increase possibilities of quickly obtaining information about breaches of the Group’s code of conduct and other serious irregularities, a whistleblowing system has been introduced. It enables members of sta to raise the alarm without the risk of reprisals and pressure. In the system was tested at three units and will be introduced throughout the entire Group in . Directors’ report 35

Risks and risk management volumes, short development times and fast Nolato’s strategy includes continuously mini- technology changeovers. Now that all mobile ■ The aim of Nolato’s mising operational risks through active and phone-related production is based in Asia, risk management planned risk management, while still capital- the business area has a high degree of flex- ising on the business opportunities that con- ibility and therefore greater opportunities to ■ Reducing the risks in the Group’s operations while enabling good business oppor- trolled risk-taking brings. The main features deal with these conditions in a cost-e ective tunities to be strengthened. of risk management are identification, eval- manner. uation, governance, reporting, monitoring ■ Creating a high level of risk awareness and control. For di erent types of significant Nolato Industrial throughout the entire organisation, from risks, there are routines for accepting, reduc- Nolato Industrial operates in a fragmented operational functions at company level to ing or eliminating the risk. and diversified market, which closely tracks the Group management and Board. the fluctuations of the Northern European ■ Supporting Nolato’s Board and Group Operational risks industrial business cycle. The market fea- management in risk assessments. Operational risks arise in Nolato’s day-to-day tures a large number of customers and a large operations in connection with markets, cus- number of suppliers, which requires contin- ■ Creating, by means of an open and reliable tomers, suppliers and production. uous cost cutting and productivity increas- information flow, a basis for the constant es. Nolato Industrial deals with this through evaluation of risks and opportunities. Market and customer risks its cost-e ective, highly productive plants in ■ Contributing to constant improvements at As a supplier, Nolato conducts operations Sweden, Hungary and Romania. all levels through continual evaluation and that are highly dependent on customers’ monitoring of risks. internal decisions and commercial perfor- Customer dependence mance. Factors among customers that we Nolato Telecom has a greater dependency on cannot influence, such as postponed or can- a small number of large customers, where- celled projects, higher or lower sales volumes as other business areas’ customer bases are and longer or shorter product life span, are broader. thus of great significance to Nolato’s sales The Group’s revenues are mostly derived and profit. from medium-sized and large global indus- It is not possible to eliminate this type of trial groups. These tend to be open when it risk. However, through continual and close comes to providing information, and Nolato contact with our customers, we seek to mini- constantly monitors their financial position. mise the consequences of such changes. The This decreases – but does not entirely elimi- operations are conducted in three customer- nate – the risk of bad debt losses and other focused business areas with di erent orien- financial problems. tations, so market and customer risks can be managed in the way that benefits each busi- Supplier risks ness area best. Supplier risks involve both the risk of a supplier being unable to deliver on time or at the Nolato Medical right quality and the risk of changes to prices Nolato Medical’s market has promising long- from a supplier that cannot be passed on to term potential for growth, and the business the customer. area has grown sharply in recent years. The For input goods and machinery, this risk is market consists of large, global customers, limited by the fact that there are a number of featuring demanding development work, long alternative suppliers. product life spans and strict requirements in In terms of components for Group-sup- terms of quality and safety. plied system products, the choice of suppli- A customer-focused organisation with a er is usually made in consultation with the sound understanding of customers’ specific customer. In some cases, changing supplier requirements, combined with cutting-edge requires customer approval. expertise in technology and project manage- The price of plastic and rubber raw mate- ment, and constant customer and market rials is dependent on oil prices and currency monitoring, limits the risks that can arise in fluctuations, as well as factors such as pro- the operations. duction capacity and production costs in the intermediate processing stages. Nolato Telecom Quantities of plastic raw materials vary Nolato Telecom’s market has few custom- from business area to business area. For ers and is considerably more volatile, with Nolato Telecom, with its many thin-walled short product life cycles, varying production products, plastic only accounts for around 36 Directors’ report

percent of the selling price on average, while continuously works on a risk management way of pattern or trademark protection, the corresponding figure is around – per- programme. which is typical of the type of operations car- cent for Nolato Medical and – percent The basis of Nolato’s proactive strategy for ried out by the Group. for Nolato Industrial. managing and, over time, reducing property Nolato is not involved in any ongoing legal In certain cases, changes in raw material damage and business interruption risks is the disputes of any significance to the Group, nor prices are dealt with through customer agree- Nolato Risk Management Handbook and the in any other ongoing tax cases of any signifi- ments. Nolato Risk Classification. cance. The right to make adjustments applies to Nolato has agreements with financial insti- these agreements where material prices have The Nolato Risk Management Handbook tutions which can be terminated in the event changed beyond certain agreed levels, limiting The Risk Management Handbook is an inter- of any significant change in the ownership sensitivity to changes in material prices. nal management document that describes control of the Company. The price of electricity is also included the Group’s desired risk level and the strat- in this risk category, since the Group’s pro- egy for managing risks in the Group’s units. Financial risks duction operations are relatively electricity- The main purpose of the Risk Management Financial risks include foreign exchange, intensive. The risk of rising electricity prices Handbook is to reduce the probability of sig- interest rate, financing, credit and liquid- is addressed by the Group entering into fixed nificant damage and guarantee delivery reli- ity risks, as well as insurable risks. In order price agreements for – percent of elec- ability to customers. to manage these risks, the Group operates tricity requirements for the next four to twelve As part of Nolato’s work with risk man- according to a financial policy adopted by quarters, with the aim of evening out the agement, inspections of the production units Nolato’s Board of Directors. e ects of price changes. are carried out alongside risk engineers from The Group’s financial management is cen- Nolato’s external risk management advisors. tralised within its financial department, which Quality and production risks This ensures that the risks are managed in provides sound internal control and manage- Nolato supplies products in accordance with line with the handbook, and that local man- ment of the Group’s financial risks. its customers’ technical specifications and agement is supported in its risk management Comments and an account of the Group’s quality requirements. These are dealt with work. The inspections are carried out in the financial risk management can be found in daily by skilled sta in the operational Group context of long-term planning, based on con- Note on pages –. companies. tinual visits to all units. The biggest risks of deviations in quality and production normally arise in connection The Nolato Risk Classi cation with new product start-ups. This is particu- The Risk Classification is used to gain an larly true when commissioning major mobile overview of the compliance of risk level and phone projects, where there is a risk of qual- risk management at the plants with the level ity and productivity disruption which could stipulated in the Nolato Risk Management a ect Group earnings. In order to counteract Handbook. any such disruptions, the Group follows an The result of inspections carried out in advanced concept involving established qual- indicated a generally decent risk level. ity assurance requirements and checklists. Both large and small discrepancies have been The risk of error in customer deliveries is identified. Each unit is working on constant reduced partly by e cient and reliable qual- improvements and developing action plans ity control systems, and partly through very for managing these discrepancies, and hence close contact with each customer. reducing the risk level. All of the Group’s production units are cer- All risk management in the Nolato Group tified in accordance with . The major- occurs based on a cost/benefit perspective. ity of units are also certified in accordance Key investments and large discrepancies are with the standard for the automotive industry investigated and given an order of precedence / , the standard for medical tech- at Group level so that they can be managed in nology or the standard for pharma- a way that is optimal for the entire group. ceutical packaging . Legal risks Property damage and Nolato works with external lawyers and business interruption risks consultants on legal issues. The Group also In order to manage property damage and has internal policies and regulations relat- business interruption in the Group (due, for ing to which agreements senior executives are instance, to fire, explosion, natural disas- authorised to enter into. ter, damage to machinery, and so on), Nolato Nolato holds few patents and little in the Directors’ report 37

Risks relating to sustainability Guidelines for the remuneration Proposed appropriation of profits More demanding environmental legislation, of senior executives The profit at the disposal of the Annual Gen- taxes, fees and other environmental require- The guidelines for the remuneration of senior eral Meeting is as follows: ments can entail significant costs for industri- executives agreed on at the latest Annual Gen- al operations. eral Meeting are detailed in Note on pages Retained profit SEK 422 million There are also risks from a business per- –. This note also explains what happens Profit for the year SEK 117 million spective relating to the environment and if these executives resign or are dismissed by Total SEK 539 million social responsibility, which have been identi- the Company. The guidelines for the remu- fied in recent years, with a particular focus on neration of senior executives are essentially The Board of Directors and the President and production in developing countries. the same as the Board’s proposals for guide- CEO propose that these earnings be appro- Nolato carries out regular risk assessments lines proposed to the Annual General priated as follows: in the field of sustainability in the countries Meeting. where we operate. The aim is to identify new Div. to shareh. of SEK 6.00 per share SEK 158 million risks and/or costs relating to the environment, Nolato’s shares To be carried forward SEK 381 million ethics and social responsibility as early on as Nolato AB was listed on the Stockholm Stock Total SEK 539 million possible. Exchange in , and its B shares are listed in the Mid Cap segment and are included in the The proposed dividend is, in the view of the Operations with permit requirements Industrials sector. Board of Directors, justifiable with respect to Nolato’s production units have the permits The share capital totals SEK million, the demands that the type and size of opera- required for their operations, and no new divided into ,, shares. Of these, tions and the risks associated with them place requirements from authorities that would there are ,, A shares and ,, on shareholders’ equity and the Company’s involve significant costs have been identified B shares. The A shares entitle holders to ten capital requirements, liquidity and financial in the year’s review. votes and the B shares to one vote. All shares position. The Group’s units also meet the require- have equal rights to the assets and earnings of ments of the REACH chemical legislation. the company. Events after At the end of , Nolato had , share- the end of the financial year Contaminated land and holders. Only one individual shareholder, No significant events have occurred since the hazardous substances Backahill AB with . percent of the num- balance sheet date. There has been no known occurrence of con- ber of votes, represents at least one tenth of taminated land, neither are there any require- the number of votes for all shares in the Com- Future performance ments in terms of investigations or decon- pany. Nolato’s financial position remains strong, tamination. At the turn of the year, the five largest creating freedom and opportunities to act, In Sweden, some of the operations have shareholder groups in Nolato were the Pauls- while enabling our customers to feel secure in been classified according to the Mifu meth- son family with . percent (.) of the cap- their choice of Nolato as supplier. Combined od of the envionmental authorities. The clas- ital, Lannebo fonder with . percent (.), with a high level of technological expertise sification is administrative in nature and is the Jorlén family with . percent (.), the and professionalism, modern production not based on any actual sample-taking of Boström family with . percent (.) and units and customer-adapted geographic pres- land and ground water. None of the facilities Svolder with . percent ( . ). ence in Europe, Asia and North America, are prioritised by the authorities for further Nolato does not have any restrictions on this constitutes an excellent platform for the measures. There is no occurrence of asbestos the transferability of its shares as a result of future operations. to any significant extent, or of PCB. legal provisions or the company’s Articles of However, Nolato does not provide any Association. earnings forecast because as a supplier, the Making products more Full information about Nolato’s shares and Company conducts operations that are high- environmentally friendly shareholders can be found on pages –. ly dependent on its customers’ internal deci- Society has a growing interest in environmen- sions and commercial performance. Factors tally friendly products, and one identifiable Corporate governance among customers that we cannot influence, business risk is the Company’s product range Information about the Company’s manage- such as postponed or cancelled projects, high- including products that are no longer accept- ment and the work of the Board during the er or lower sales volumes and longer or short- ed by customers. year can be found in the corporate governance er product life spans, are therefore of great As a supplier, Nolato has limited possi- report on pages –. significance in terms of Nolato’s future per- bilities of countering this risk, because most formance. products are manufactured by assignment of customers. Nolato works in close collaboration with them and constantly monitors developments to be able to initiate the exchange of existing materials with new, more environmentally friendly alternatives. 38 Financial reports

■ Consolidated income statement

SEKm Note 2012 2011 Net sales 6 3,874 2,977 Cost of goods sold 7 – 3,353 – 2,610 Gross pro t 521 367

Other operating income 8 11 39 Selling expenses – 82 – 72 Administrative expenses 9 – 156 – 144 Other operating expenses 10 – 7 — – 234 – 177

Operating pro t 11,18 287 190

Financial income 14 0 3 Financial expenses 15 – 15 – 10 – 15 – 7

Pro t after nancial income and expense 272 183

Tax 17 – 70 – 51

Pro t for the year attributable to Parent Company shareholders 202 132

Depreciation/amortisation and impairment included at 12 157 170

Earnings per share, basic and diluted (SEK) 7.68 5.02

Number of shares on 31 December (thousand) 26,307 26,307 Average number of shares (thousand) 26,307 26,307

■ Consolidated comprehensive income

SEKm 2012 2011 Pro t for the year attributable to Parent Company shareholders 202 132

Other comprehensive income Translation differences for the year on translation of foreign operations – 17 0 Changes in the fair value of cash flow hedges for the year 1 1 Changes in the fair value of cash flow hedges transferred to profit for the year 0 – 3 Tax attributable to fair value measurement of cash flow hedges 0 0 Tax on transfers to the income statement attributable to cash flow hedges 0 0 Total other comprehensive income – 16 – 2

Comprehensive income for the year attributable to Parent Company shareholders 186 130 Financial reports 39

■ Consolidated balance sheet

SEKm Note 2012 2011 Assets

Fixed assets Intangible ﬁxed assets 19 553 434 Property, plant and equipment 22 735 706 Other securities held as non-current assets 2 2 Other long-term receivables 2 1 Deferred tax assets 17 35 40 Total xed assets 1,327 1,183

Current assets Inventories 24 288 236 Accounts receivable 25 682 521 Current tax assets 1 4 Other receivables 48 62 Derivative assets 33 3 0 Prepaid expenses and accrued income 13 14 Cash and bank 272 124 Total current assets 1,307 961

Total assets 2,634 2,144

Shareholders’ equity and liabilities

Shareholders’ equity Share capital 26 132 132 Other capital contributed 228 228 Other reserves 27 4 20 Retained earnings 841 771 Total shareholders’ equity 1,205 1,151

Long-term liabilities Provisions for pensions and similar obligations 29 95 93 Deferred tax liabilities 17 114 115 Other liabilities, interest-bearing 1 — Other provisions 31 23 4 Total long-term liabilities 233 212

Current liabilities Accounts payable 529 407 Current interest-bearing liabilities 28 254 113 Customer advances 25 13 Current tax liabilities 19 2 Other liabilities 35 35 Derivative liabilities 33 1 1 Accrued expenses and deferred income 32 333 210 Total current liabilities 1,196 781

Total liabilities 1,429 993

Total liabilities and shareholders’ equity 2,634 2,144

Pledged assets 36 1 0 Contingent liabilities 37 2 2 40 Financial reports

■ Changes in consolidated shareholders’ equity

Attributable to Parent Company shareholders SEKm Share- Other capi- Hedging Translation Retained Total capital tal contrib’d reserves reserves earnings shareh. equity Opening balance, 1 January 2011 132 228 2 20 797 1,179 Proﬁt for the year — — — — 132 132 Other comprehensive income for the year — — – 2 0 — – 2 Comprehensive income for the year — — – 2 0 132 130 Dividend for 2010 — — — — – 158 – 158 Closing balance, 31 December 2011 132 228 0 20 771 1,151

Opening balance, 1 January 2012 132 228 0 20 771 1,151 Proﬁt for the year — — — — 202 202 Other comprehensive income for the year — — 1 – 17 — – 16 Comprehensive income for the year — — 1 – 17 202 186 Dividend for 2011 — — — — – 132 – 132 Closing balance, 31 December 2012 132 228 1 3 841 1,205 Financial reports 41

■ Consolidated cash ﬂow statement

SEKm Note 2012 2011 39 Operating activities Operating proﬁt 287 190 Adjustments for items not included in cash ow: Depreciation/amortisation and impairment 157 170 Provisions 8 7 Capital gain/loss on disposals 2 0 Unrealised exchange rate differences 13 – 9 Other items 1 7 Pension payments – 5 – 5 Provisions paid — – 3 Interest received 0 3 Interest paid – 14 – 10 Realised exchange rate differences – 2 – 1 Income tax paid – 60 – 45 Cash ow from operating activities before changes in working capital 387 304

Cash ow from changes in working capital Changes in inventories – 34 – 11 Changes in accounts receivable – 137 102 Changes in accounts payable 110 – 47 Other changes in working capital 150 – 102 89 – 58

Cash ow from operating activities 476 246

Investment activities Acquisition of intangible ﬁxed assets – 2 – 3 Acquisition of property, plant and equipment – 157 – 131 Acquisition of operations, excluding cash and cash equivalents – 176 — Sale of property, plant and equipment 0 0 Acquisition of other ﬁnancial assets 0 0 Cash ow from investment activities – 335 – 134

Cash ow before nancing activities 141 112

Financing activities Borrowings 254 23 Repayment of loans – 110 – 90 Dividend paid – 132 – 158 Cash ow from nancing activities 12 – 225

Cash ow for the year 153 – 113 Cash and cash equivalents, opening balance 124 239 Exchange rate difference in cash and cash equivalents – 5 – 2 Cash and cash equivalents, closing balance 272 124 42 Financial reports

■ Parent Company income statement

SEKm Note 2012 2011 Net sales 5 19 19

Other operating income 8 — 5 Selling expenses – 7 – 9 Administrative expenses 9 – 42 – 37 Other expenses 10 – 3 — – 52 – 41

Operating pro t 5,11,12,18 – 33 – 22

Proﬁt from participations in Group companies 13 44 162 Financial income 14 25 18 Financial expenses 15 – 29 – 21 40 159

Pro t after nancial income and expense 7 137

Appropriations 16 149 130 Tax 17 – 39 – 29

Pro t for the year 117 238

■ Parent Company comprehensive income

SEKm 2012 2011 Pro t for the year 117 238

Other comprehensive income Exchange rate difference on monetary items in relation to overseas net investment – 1 – 2

Comprehensive income for the year 116 236

■ Parent Company changes in shareholders’ equity

Restricted equity Unrestricted equity SEKm Share- Statutory Translation Retained Profit for Total capital reserve reserve earnings the year sh. equity Opening balance, 1 January 2011 132 228 2 475 — 837 Profit for the year — — — — 238 238 Other comprehensive income for the year — — – 2 — — – 2 Comprehensive income for the year — — – 2 — 238 236 Appropriation of profits — — — 238 – 238 — Dividend for 2010 — — — – 158 — – 158 Closing balance, 31 December 2011 132 228 — 555 — 915

Opening balance, 1 January 2012 132 228 — 555 — 915 Proﬁt for the year — — — — 117 117 Other comprehensive income for the year — — – 1 — — – 1 Comprehensive income for the year — — – 1 — 117 116 Appropriation of proﬁts — — — 117 – 117 — Dividend for 2011 — — — – 132 — – 132 Closing balance, 31 December 2012 132 228 – 1 540 — 899 Financial reports 43

■ Parent Company balance sheet

SEKm Note 2012 2011 Assets

Intangible xed assets Software 19 1 1

Property, plant and equipment Equipment 21 0 0

Financial assets Participations in Group companies 23 550 485 Receivables from Group companies 30 442 307 Other securities held as non-current assets 2 2 Other long-term receivables 0 0 Deferred tax assets 17 4 6 Total xed assets 999 801

Current assets Receivables from Group companies 470 404 Other receivables 0 15 Prepaid expenses and accrued income 2 1 472 420

Cash and bank 42 39

Total assets 1,513 1,260

Shareholders’ equity and liabilities

Shareholders’ equity Restricted equity Share capital (26,307,408 shares) 26 132 132 Statutory reserve 228 228 360 360

Unrestricted equity Retained earnings 422 317 Proﬁt for the year 117 238 539 555

Total shareholders’ equity 899 915

Untaxed reserves 35 179 160 Other provisions 31 5 4

Long-term liabilities Liabilities to Group companies 30 17 17

Current liabilities Liabilities to credit institutions 28 254 0 Accounts payable 2 1 Liabilities to Group companies 125 148 Current tax liabilities 12 4 Other liabilities 1 1 Accrued expenses and deferred income 32 19 10 Total current liabilities 413 164

Total shareholders’ equity and liabilities 1,513 1,260

Pledged assets 36 — — Contingent liabilities 37 110 225 44 Financial reports

■ Parent Company cash ﬂow statement

SEKm Note 2012 2011 39 Operating activities Operating proﬁt – 33 – 22 Adjustments for items not included in cash ow: Depreciation/amortisation and impairment 2 — Provisions 0 — Unrealised exchange rate differences – 1 0 Dividends from subsidiaries 16 223 Liquidation proﬁt from subsidiaries — 9 Interest received 25 18 Interest paid – 7 – 21 Income tax paid – 29 – 11 Cash ow from operating activities before changes in working capital – 27 196

Changes in working capital Changes in operating receivables and operating liabilities – 28 – 304

Cash ow from operating activities – 55 – 108

Investment activities Acquisition of intangible ﬁxed assets 0 — Acquisition of property, plant and equipment — 0 Acquisition of ﬁnancial assets – 70 — Shareholders’ contribution – 2 – 2 Cash ow from investment activities – 72 – 2

Cash ow before nancing activities – 127 – 110

Financing activities Borrowings 254 — Repayment of loans — – 30 Change in long-term intra-Group transactions – 157 90 Dividend paid – 132 – 158 Group contributions received 170 151 Group contributions paid – 5 – 9 Cash ow from nancing activities 130 44

Cash ow for the year 3 – 66 Cash and cash equivalents, opening balance 39 105 Exchange rate difference in cash and cash equivalents 0 0 Cash and cash equivalents, closing balance 42 39 Financial reports 45

Basis for preparing the nancial statements Intra-Group transactions and balance sheet items and Note 1 General information The functional currency of the Parent Company is the unrealised gains/losses on transactions between Group Swedish krona (SEK), which is also the reporting cur- companies are eliminated. The accounting principles Nolato is a high-tech developer and manufacturer of rency for the Parent Company and the Group. This for subsidiaries have, where applicable, been changed polymer product systems for leading customers in means that the financial statements are presented in to ensure the consistent application of consolidated ac- medical technology, telecommunications, hygiene, au- Swedish kronor. All amounts are presented in millions counting principles. tomotive products and other selected industrial sectors. of kronor unless otherwise indicated. The Parent Company Nolato AB, corporate identity Assets and liabilities are recognised at their histori- Translation of foreign currencies number 556080-4592, is a limited company with its cal acquisition costs, except for certain financial as- Items included in the financial statements for the various registered office in Torekov, Sweden. Its head office sets and liabilities, which are measured at fair value. In units in the Group are measured in the currency used in address is 269 04 Torekov, Sweden. Nolato, these consist of currency derivatives measured the economic environment in which each company pri- Nolato’s B shares are listed on the NASDAQ OMX at fair value. Fixed assets and long-term liabilities con- marily operates. The Swedish krona (SEK), which is the Nordic Exchange in the Stockholm Mid Cap segment sist in all significant respects only of amounts which are Parent Company’s functional currency and reporting cur- and are included in the Industrials sector. expected to be recovered or paid after more than twelve rency, is used in the consolidated accounts. For subsidi- months after the balance sheet date. Current assets aries, the local currency of their respective countries is and current liabilities consist in all significant respects used as the reporting currency, and this is considered to only of amounts which are expected to be recovered or constitute the functional currency. Note 2 Accounting and paid within twelve months of the balance sheet date. Transactions in foreign currencies are translated into valuation principles Offsetting of receivables and liabilities and of income the functional currency at the rate in effect on the trans- and expenses is done only if this is required or express- action date. Exchange rate gains and losses arising ly permitted. from the payment of such transactions and from the re- Compliance with standards and laws Preparing the financial statements in accordance valuation of monetary assets and liabilities denominat- The consolidated accounts have been prepared in ac- with IFRS requires that Group management makes ed in foreign currencies at the rate on the balance date cordance with International Financial Reporting Stand- judgements, estimates and assumptions which af- are recognised in profit for the year. ards (IFRS) issued by the International Accounting fect the application of accounting principles and the The profit and financial position of all Group compa- Standards Board (IASB) and interpretations from the recognised amounts for assets, liabilities, income nies are translated into the Group’s reporting currency International Financial Reporting Interpretations Com- and expenses. Estimates and assumptions are based as follows: mittee (IFRIC), as adopted by the EU. Recommendation on historical experience and a number of other fac- – assets and liabilities are translated at the rate on the RFR 1 of the Swedish Financial Accounting Standards tors which seem reasonable given current conditions. balance sheet date Council, Supplementary Rules for Consolidated Finan- The actual outcome may deviate from these estimates – income and expenses are translated at the average cial Statements, has also been applied. and assumptions. The estimates and assumptions rate of exchange for the financial year The Parent Company applies the same accounting are reviewed regularly. Changes to estimates are re- – exchange rate differences that arise are recognised principles as the Group, except in those cases speci- ported during the period when the change is made if as translation differences for the year in the transla- fied in the section “the Parent Company’s accounting the change only affects that period, or during the pe- tion of foreign operations under other comprehen- principles”. riod when the change is made and future periods if the sive income. change affects both the current period and future pe- Signi cant accounting principles applied riods. Operating segments Apart from those exceptions described in further de- Assumptions made by Group management in the ap- An operating segment is a part of the Group that entail, the following accounting principles have been application of IFRS standards which have a significant im- gages in business activities from which income can be plied consistently to all periods presented in the Group’s pact on the financial statements, and estimates made generated and expenses incurred, and for which sep- financial statements. The accounting principles have which may entail significant adjustments to the finan- arate financial information is available. An operating been applied consistently by the Group’s companies. In cial statements for the following year are described un- segment’s performance is also monitored by the com- addition, comparison figures have been reclassified in der Note 3, “Significant estimates and judgements”. pany’s highest executive decision-maker to evaluate those cases where the principles have been changed in the performance and make decisions about resources order to correspond with the figures presented in this Business combinations and to be allocated to the operating segment. The Group’s year’s financial statements, as described below. consolidation principles three operating segments are Nolato Medical, Nolato The consolidated financial statements comprise the Telecom and Nolato Industrial. See Note 6 for a more Changes in the Group’s accounting principles Parent Company, Nolato AB, and the subsidiaries in detailed description of the breakdown and presentation Over the course of the year, the EU approved a number of which Nolato AB has a direct or indirect controlling in- of the operating segments. new and amended IASB and IFRIC standards and state- fluence. Controlling influence is defined as the right to ments, which entered into force during 2012. In those draw up a company’s financial and operations strate- Revenue recognition cases where the principles have been changed, the gies with a view to realising financial benefits. This is Revenue is recognised when virtually all risks and amended standards and statements have affected the usually achieved if the holding corresponds to over 50 rights associated with ownership are transferred to the Group’s presentation of the financial statements. percent of the number of votes. Companies acquired buyer, which normally occurs in connection with deliv- or disposed of are included in profit for the year for the ery having taken place, and when the price has been New IFRS standards and Group from the time of the acquisition up until the date established. The revenues are recognised at the fair interpretations not yet applied when controlling influence ceases. value of what has been received or will be received, mi- IASB and IFRIC have issued new standards and state- The consolidated financial statements have been nus discounts awarded. Gains and losses on forward ments which come into force for financial years begin- prepared in accordance with IFRS 3 Business Combi- contracts entered into for hedging purposes are de- ning on 1 January 2013 or later. There are no plans for nations and by applying the acquisition method. This ducted from earnings together with the transaction to the early application of new or amended standards and method means that shareholders’ equity in the Group which the hedging relates. statements for future application. An important amend- includes shareholders’ equity in the Parent Company ment to IAS 19, applicable as of the financial year start- and the portion of shareholders’ equity in subsidiar- Impairment ing 1 January 2013 with retroactive application, is the ies which has accumulated since the acquisition. The On each reporting date, the Company evaluates if there disappearance of our current application of the corridor difference between the acquisition cost of shares in a is objective proof of impairment for a financial asset or method as a mechanism to even out actuarial gains/ subsidiary and that company’s shareholders’ equity group of assets. Objective proof consists partly of ob- losses. This change will affect other consolidated com- at the time of acquisition, adjusted in accordance with servable circumstances that have arisen and that have prehensive income. Other new and amended standards consolidated accounting principles, has been allocated a negative impact on the possibility of recovering the and statements have not been deemed to have any sig- among the assets and liabilities measured at market acquisition cost, and partly of a significant or prolonged nificant impact on the Group’s financial reporting, and value that were taken over on acquisition. Transaction reduction in the fair value of a financial investment are therefore excluded from this account. Nolato will costs on acquisitions are recognised under profit for the classified as an available-for-sale financial asset. continue to evaluate the effects and application of the year in accordance with IFRS 3 for the Group. Amounts The impairment for accounts receivable is estab- new standards and statements during 2013. which cannot be allocated are reported as goodwill. lished based on historical experiences of bad debt loss- 46 Financial reports

es on similar receivables. Accounts receivable with im- stantial period of time to complete for their intended Capitalised development expenditure pairment are recognised at the present value of expect- use or sale. Product development expenditure is normally charged ed future cash flows. Receivables with a short maturity as operating expenses as it occurs, and is included in are not discounted, however. The Company classifies Recognition of income taxes the cost of goods sold in the income statement. Capi- accounts receivable as doubtful when they have fallen Income taxes consist of current tax and deferred tax. In- talised development expenditure is amortised on a due for payment and when they are also deemed to be come taxes are recognised in profit for the year, except straight-line basis over the expected useful life from the non-recoverable based on other information. where the underlying transaction is recognised in other point when use of the asset can commence. The amor- Assets with an indeterminable useful life, goodwill, comprehensive income, in which case the related tax tisation period may not exceed ten years. are not amortised but impairment-tested at least once effect is recognised in other comprehensive income. Development expenditure where the results of re- a year or when there is an indication of impairment. Current tax is tax that is payable or receivable in research or other knowledge are applied in order to Goodwill impairment is not reversed. lation to the current year, with the application of the tax achieve new or improved products is recognised as an Amortised assets are assessed based on a decline rates that have been decided, or decided in practice, asset in the balance sheet if the product is technically in value whenever events or changes in circumstances as at the balance sheet date. Current tax also includes and commercially feasible and the Company has suffi- indicate that the carrying amount may not be recover- adjustments for current tax attributable to previous pe- cient resources to complete the development and sub- able. An impairment is taken in the amount at which the riods. sequently use or sell the product. The carrying amount carrying amount of the asset exceeds its recoverable Deferred tax is calculated using the balance sheet includes expenditure on materials, directly attributable value. The recoverable value is the higher of an asset’s method, taking temporary differences between recog- salary expenditure and indirect expenditure which can fair value less selling expenses and its value in use. In nised and tax-related values of assets and liabilities as be attributed to the asset in a reasonable and consistent assessing the impairment, assets are grouped at the the starting point. Temporary differences are not taken manner. Other development expenditure is recognised as lowest levels at which there are separately identifiable into account in consolidated goodwill, or for any differ- an expense in the income statement when it arises. cash flows (cash-generating units). For cash-generat- ence that arises on initial recognition of assets and lia- ing units, goodwill is impaired first. bilities that are not business combinations which, at the Customer relations In calculating the value in use, future cash flows are time of the transaction, affect neither recognised nor The Group’s capitalised customer relationships relate discounted using a discount rate which takes into con- taxable earnings. Temporary differences attributable to to assets acquired through the acquisition of the Cerbo sideration the risk-free interest rate and the risk associ- participations in subsidiaries that are not expected to Group, Medical Rubber AB, Nolato Contour Inc. in the US ated with the specific asset. be reversed within the foreseeable future are not taken and Nolato Jaycare Ltd in the UK. Straight-line depre- Impairment of loans receivable and accounts receiv- into account either. The measurement of deferred tax ciation is applied over the expected useful life, i.e. six able which are recognised at amortised cost, are re- is based on how underlying assets or liabilities are ex- to ten years. versed if a subsequent increase in the recoverable val- pected to be realised or regulated. Deferred tax is cal- ue can be objectively attributed to an event which oc- culated using the application of the tax rates and tax Property, plant and equipment curred after the impairment was carried out. rules that have been decided, or decided in practice, as Property, plant and equipment are recognised within Impairment of other assets are reversed over profit at the balance sheet date. the Group at acquisition cost after accumulated de- for the year if there is an indication that there is no long- Deferred tax assets in relation to deductible tempo- preciation according to plan and any impairment. Ex- er impairment and there has been a change in the as- rary differences and loss carry-forwards are only rec- penditure which is directly attributable to the purchase sumptions which formed the basis for calculating the ognised to the extent that it is likely that these will be of the asset is included in the acquisition cost. Insofar recoverable value. utilised. The value of deferred tax assets is reduced as there are investments which take a substantial pe- An impairment is only reversed to the extent that the once it is no longer deemed likely that they can be uti- riod of time to complete an asset for its intended use or carrying amount of the asset after reversal does not ex- lised. sale, directly attributable borrowing costs are also in- ceed the carrying amount which the asset would have Any future income tax arising on dividends is recog- cluded in the acquisition cost. Additional expenditure is had if no impairment had been carried out, taking into nised at the same time as when the dividend is recog- added to the acquisition cost only if it is likely that the account the depreciation/amortisation which would nised as a liability. future financial benefits associated with the asset will have applied at that time. accrue to the Company and the acquisition cost can be Earnings per share calculated reliably. All other additional expenditure is Government grants Earnings per share are calculated based on the consoli- reported as an expense in the period when it arises. An Government grants are recognised in the balance sheet dated profit for the year attributable to the Parent Com- additional expense is added to the acquisition cost if the and income statement only when it is reasonably cer- pany’s shareholders and on the weighted average num- expense relates to replacing identified components or tain that the terms and conditions associated with ber of shares outstanding during the year. parts thereof. The expense is also added to the acquisi- these grants will be met and the grants will be received. tion cost in the event that a new component is created. Government grants relating to assets reduce the ac- Intangible xed assets Any undepreciated carrying amounts of replaced com- quisition cost of the assets and affect recognised profit Intangible assets acquired in a business acquisition ponents or parts of components are eliminated and ex- during their useful life through lower depreciation or which are recognised separately from goodwill consist pensed in connection with replacing the component. amortisation. Government grants relating to profit re- of customer relations. Repairs are expensed on an ongoing basis. duce the expenses to which the grants are related. Gov- There is no depreciation of land. Other assets are de- ernment grants related to assets are recognised in the Goodwill preciated on a straight-line basis over their expected cash flow statement under investment activities, while Goodwill consists of the amount by which the consid- useful life, taking into account the estimated residual government grants related to profit are included in op- eration transferred exceeds the fair value of the Group’s value, as follows: erating profit. share of the identifiable net assets of the acquired subsidiary at the time of the acquisition. Goodwill from the Financial income and expenses acquisition of subsidiaries is recognised as an intan- Buildings 25 years Financial income consists of interest income on funds gible asset. Goodwill is not amortised but impairment- Land improvements 20 – 27 years invested and dividend income. tested annually, and is recognised at acquisition cost Injection moulding machines 8 – 10 years Dividend income is recognised when the right to re- less accumulated impairment losses. Any gain or loss Automated assembly equipment 3 years ceive the dividend is established. Profit from the dis- from the disposal of a unit includes the remaining car- Other machinery 5 – 10 years posal of a financial instrument is recognised once the rying amount of the goodwill associated with the unit IT 3 years risks and benefits associated with ownership of the in- disposed of. Other equipm., tools, fixtures and fittings 5 – 10 years strument have been transferred to the buyer and the Goodwill is allocated to cash-generating units in im- Group no longer has control of the instrument. pairment tests. Financial expenses consist of interest expenses on Acquired intangible assets are recognised separate- The residual value, useful life and depreciation met- loans, the effect of breaking up the present value com- ly from goodwill if they fit the definition of an asset, are hod for assets are tested each balance sheet date and putation of provisions and the impairment of financial separable or arise from contractual or other legal rights adjusted if necessary. The carrying amount of an asset assets. Borrowing costs are recognised in profit, except and their market value can be reliably measured. is impaired immediately to its recoverable value if the where they are directly attributable to the purchase, asset’s carrying amount exceeds its expected recove- construction or production of assets which take a sub- rable value. Financial reports 47

The carrying amount of an item of property, plant and Classi cation and measurement are charged to the consolidated profit as the benefits equipment is removed from the balance sheet on The Group classifies its financial instruments under one are earned. scrapping or disposal, or when no future financial be- of the following categories: Derivatives used for hedge In defined benefit schemes, remuneration to em- nefits are expected from using or scrapping/disposing accounting, loans receivable and accounts receivable. ployees and former employees is payable based on of the asset. Any gain or loss arising from scrapping or The classification depends on the purpose for which the their salary at the time they retired and the number of disposing of an asset consists of the difference bet- instrument was purchased. The classification of instru- years earned. The Group bears the risk of ensuring that ween the selling price and the carrying amount of the ments is determined at the first reporting date. payments undertaken are made. Nolato’s defined bene- asset, with direct selling expenses deducted. Gains and Currency derivatives are measured at fair value and fit schemes are unfunded. These PRI obligations are re- losses are reported as other operating income/expense. transaction charges are charged as expenses. Finan- cognised in the balance sheet as provisions. cial instruments that are not derivatives are initially Pension expenses and pension obligations stemming Leasing recognised at acquisition cost, corresponding to the from defined benefit schemes in Sweden are calculated In the consolidated financial statements, leasing is instrument’s fair value plus transaction charges. using the projected unit credit method. This method al- classified as either financial or operating leasing. Finan- Most of the Group’s financial assets and liabilities are locates pension expenses as employees perform servi- cial leasing exists where the financial risks and benefits attributable to deliveries of goods and services, where ces for the Company, which increases their entitlement associated with ownership are transferred in all signi- receivables have a short maturity. The Nolato Group re- to future payment. Independent actuaries perform the ficant respects to the lessee. If this is not the case, it is ports these receivables at amortised cost. calculation annually. The Company’s undertakings are a matter of operating leasing. Assets held according to Cash and cash equivalents have been classified as measured at the present value of expected future pay- financial leasing agreements are recognised as fixed loans and accounts receivable where the value is set at ments using a discount rate equal to the interest rate of assets in the consolidated balance sheet. The obligation amortised cost. top-rated corporate bonds or housing bonds/govern- to pay future leasing fees is recognised as a liability. ment bonds with a maturity equal to that of such under- These assets are subject to depreciation according to Recognition of derivative instruments takings. The most important actuarial assumptions are plan, while the lease payments are recognised as inte- and hedging measures provided in Note 29. rest and repayment of loans. Variable fees are expensed Currency futures are used to hedge a highly probable Actuarial gains and losses may arise in determining in the periods when they arise. Operating leasing fees forecast transaction (cash flow hedge), and in this case the present value of obligations. This arises either when are expensed over the term of the lease. Variable fees hedge accounting is applied. the actual outcome deviates from the previous assump- are expensed in the periods when they arise. Hedge accounting does not apply to currency hed- tion, or when assumptions change. The portion of ac- ging in large investments in property, plant and equip- cumulated actuarial gains and losses at the close of the Inventories ment and for large internal long-term loans receivable preceding year which exceeds 10 percent of the pre- Inventories are measured at the lower of the acquisition issued by the Parent Company in a currency other than sent value of the obligations is recognised in earnings cost and the net market value. The acquisition cost of SEK, which are hedged for future repayment. over the employees’ average remaining period of servi- inventories is calculated by applying the first in, first out ce in accordance with the corridor method. The change principle (FIFO), and includes expenditure arising on the Cash ow hedging of forecast sales in foreign currency to IAS 19 regarding the removal of the corridor method acquisition of the inventory assets and on transporting The effective portion of changes in the fair value of de- will affect the opening balance of shareholders’ equity them to their present location and condition. For finis- rivative instruments which have been identified as cash at 01/01/2012 in the amount of SEK –33,826,430, and hed goods and work in progress, the acquisition cost in- flow hedges and which meet the conditions for hedge retroactive application will affect other comprehensive cludes a reasonable proportion of indirect costs based accounting is recognised in other comprehensive inco- income in the amount of SEK –1,090,862 for the com- on normal capacity. me. Accumulated amounts in the hedging reserve are parative year 2012 in the 2013 annual report. Interest The net market value is the estimated selling price in reversed to the profit for the year in those periods when on pension liabilities is recognised in net financial in- the operating activities, after deductions for estimated the hedged item affects earnings (for instance, when a come/expense. Other components are recognised in costs for completion and for realising a sale. forecast sale took place). operating profit. When a hedge instrument matures or is sold, or The liability for retirement pensions and family pen- Financial instruments when the hedge no longer meets the conditions for sions for executives in Sweden is secured through a Recognition in and removal from the balance sheet hedge accounting and there are accumulated gains or policy with Alecta. According to a statement issued by A financial asset or a financial liability is included in the losses from hedging in other comprehensive income, the Swedish Financial Reporting Board, UFR 3, this is balance sheet when the company becomes a party in those gains/losses remain in other comprehensive in- a multiple-employer defined benefit scheme. For the accordance with the contractual agreements of the income and are entered as income at the same time as 2012 financial year, the Company had no access to any strument. A receivable is included when the Company the forecast transaction is ultimately recognised under information that would enable it to recognise this sche- has delivered and there is a contractual obligation for profit for the year. me as a defined benefit scheme. The ITP pension sche- the counterparty to pay, even if an invoice has not yet When a forecast transaction is no longer expected to me (supplementary pensions for salaried employees), been sent. Accounts receivable are included in the ba- take place, the accumulated profit or loss recognised in which is insured by Alecta, is thus recognised as a defi- lance sheet once the invoice has been sent. Liabilities other comprehensive income is immediately transfer- ned contribution scheme. are included once the counterparty has delivered and red to profit for the year. there is a contractual obligation to pay, even if an invoi- Share-based remuneration ce has not yet been received. Accounts payable are in- Cash and cash equivalents The Group has a share-based remuneration scheme cluded once an invoice has been received. Cash and cash equivalents consist of cash assets and in which payment will ultimately be made in cash. The A financial asset is removed from the balance sheet immediately available balances at banks and equiva- scope and conditions of the programme are detailed in once the rights in the agreement have been realised, or lent institutions, as well as short-term liquid invest- Note 11 under “Stock options programme”. Remunera- fallen due, or the company loses control of them. The ments maturing less than three months from the time tion is measured at fair value and recognised as an ex- same applies for part of a financial asset. A financial lia- of acquisition and which are exposed only to an insigni- pense with a corresponding increase in liabilities. bility is removed from the balance sheet when the obli- ficant risk of fluctuations in value. Fair value is calculated initially at the time of issue gation in the agreement is met or is otherwise satisfied. and allocated over the vesting period. The fair value The same applies for part of a financial liability. Employee remuneration of cash-settled options is calculated according to the A financial asset and a financial liability are offset Pension obligations Black & Scholes model. At the date of measurement, and recognised at a net amount in the balance sheet There are a number of both defined contribution and the terms and conditions of the issued instruments are only when there is a legal entitlement to offset the items defined benefit pension schemes within the Group. In taken into account. The liability is revalued on each ba- and there is an intention to settle the items at a net Sweden, employees are included in both defined bene- lance sheet date and at the time of cash settlement. All amount or to realise the asset and settle the liability si- fit and defined contribution pension schemes. In other changes in the fair value of the liability are recognised multaneously. foreign subsidiaries at which employees are covered in the income statement as a personnel cost. Acquisitions and disposals of financial liabilities are by pension schemes, these are defined contribution The basis for provisioning and expensing social se- recognised on the business day that constitutes the schemes. curity contributions in relation to share-based remune- date when the company commits to acquire or dispose In defined contribution schemes, the company pays ration is the fair value of the options at the date of mea- of the asset. defined contributions to a separate legal entity and has surement. no obligation to make further contributions. Expenses 48 Financial reports

Bonus schemes Entities. The Swedish Financial Reporting Board’s sta- fact that all actuarial gains and losses are recognised in The provision for variable remuneration is based on the tements relating to listed companies have also been the income statement when they arise. bonus policy established by the Board. The liability is in- applied. RFR 2 involves the Parent Company, in the an- cluded in the balance sheet when a reliable measure- nual report for the legal entity, applying all IFRS stan- Recognising income taxes ment can be carried out and when services have been dards and statements adopted by the EU as far as In the Parent Company, untaxed reserves are recogni- rendered by the employee. possible within the framework of the Swedish Annual sed gross as a liability in the balance sheet. Appropria- Accounts Act and the Swedish Law on Safeguarding tions are recognised as gross amounts in the income Severance pay Pension Obligations, and in view of the relationship bet- statement. Severance pay is awarded when an employee’s posi- ween accounting and taxation. The recommendation tion is terminated prior to the normal retirement date. details which exceptions from and additions to IFRS Group contributions for legal entities The Group reports the severance pay as a liability when shall apply. The Swedish Financial Reporting Board has withdrawn it is demonstrably obliged to terminate employment ac- Transaction charges attributable to the acquisition UFR 2. Group contributions paid and received in the cording to a detailed formal plan without the possibility of shares in subsidiaries are included in the acquisition Parent Company are recognised as appropriations of rehire, and the employee does not carry out any ser- cost of participations in Group companies in the ba- according to the alternative rule. The previous year has vices which bring financial benefits for the Company. lance sheet. also been changed. Benefits which fall due after more than twelve months The accounting principles of the Parent Company from the balance sheet date are discounted to present otherwise comply with the consolidated accounting Property, plant and equipment value. principles, with the following exceptions: Fixed assets are recognised at acquisition cost less accumulated depreciation according to plan, in the same Provisions Classi cation and formats way as for the Group. However, no borrowing costs are A provision differs from other liabilities in that there is un- The income statement and balance sheet have been capitalised in the Parent Company. Depreciation has certainty in relation to the payment date or the size of the produced for the Parent Company in accordance with been calculated based on estimated useful life. The fol- amount in terms of settling the provision. A provision is the Swedish Annual Accounts Act’s format, while the lowing depreciation periods have been used: recognised in the balance sheet when there is an existing comprehensive income statement, the statement of legal or informal obligation as a result of an event that changes in shareholders’ equity and the cash flow sta- IT 3 years has occurred, and it is likely that an outward flow of fi- tement are based on IAS 1 Presentation of Financial Other equipment 5 years nancial resources will be required to settle the obligation Statements and IAS 7 Cash Flow Statements. The diffe- and a reliable estimation of the amount can be made. rences compared with the consolidated reports that are Leasing Provisions are made at the amount that is the best evident in the Parent Company’s income statements The Parent Company only has leasing agreements for estimate of what is required in order to settle the exis- and balance sheets consist primarily of reporting finan- leasing office space and certain other rental contracts. ting obligation on the balance sheet date. If the effect cial income and expenses and the classification of sha- All leasing agreements are recognised as operating of when the payment will be made is significant, provi- reholders’ equity. leases. sions are calculated by discounting the anticipated future cash flow at a rate of interest before tax which re- Sales flects current market assessments of the time value of Assigning joint Group expenses the money and, if appropriate, the risks associated with The Parent Company has the character of a holding Note 3 Significant estimates the liability. company, in which expenses consist solely of invoicing and judgements for joint Group expenses, particularly personnel costs Restructuring for Group staff and other joint Group overheads, such The Group management and the Board of Directors A provision for restructuring is recognised when there as insurance, licensing fees, etc. Invoicing is carried out make estimates and assumptions about the future. is an established detailed and formal restructuring plan, when services are rendered or when other resources These estimates and assumptions affect recognised and the restructuring process has either begun or been have been received by the counterparty. assets, liabilities, income and expenses, as well as publicly announced. No provision is made for future other information submitted, for instance contingent operating expenses. Financial instruments liabilities. These estimates are based on historical ex- In view of the relationship between reporting and taxa- perience and the various assumptions that are deemed Contingent liabilities tion, the rules on financial instruments and hedge ac- to be reasonable in the prevailing circumstances. Con- A contingent liability is recognised when there is a pos- counting contained in IAS 39 are not applied within the clusions drawn in this way form the basis for decisions sible obligation deriving from events that have occurred Parent Company as a legal entity. The Parent Company relating to the carrying amounts of assets and liabili- and the occurrence of which is confirmed only by one or does not therefore recognise the fair value measure- ties in those cases where these cannot be established more uncertain future events, or when there is an obli- ment of currency futures/currency swaps in the balan- by means of other information. Actual outcomes may gation that is not recognised as a liability or provision ce sheet. Outstanding derivative instruments as at 31 differ from these judgements if other assumptions are on the grounds that it is not likely that an outward flow December 2012 are described in Note 33. made or other circumstances arise. of resources will be required. The areas which include such estimates and judge- Remuneration to employees ments that may have a significant impact on the Cash ow statement De ned bene t schemes Group’s profit and financial position include: The cash flow statement was prepared using the indi- Defined benefit pension schemes are insured through a rect method. The recognised cash flow includes only policy held with Alecta. According to RFR 2, the defined Calculations regarding remuneration to employees transactions which involve payments made or pay- benefit pension schemes are classified and recogni- The value of pension obligations for defined benefit ments received. Changes for the year in operating re- sed as defined contribution schemes, which means that pension schemes is based on actuarial calculations ceivables and operating liabilities have been adjusted premiums paid are charged to the income statement. on the basis of assumptions about discount rates, fu- for effects of unrealised currency exchange rate fluc- Charges for the year to Alecta totalled SEK 401 k (247). ture salary increases, inflation and demographic cir- tuations. Acquisitions and disposals are recognised in Within the Parent Company, a different basis than that cumstances. At the end of the year, pension liabilities investment activities. The assets and liabilities attribu- set out in IAS 19 is applied when calculating and valu- amounted to SEK 95 million (93). Applicable account- table to the companies acquired or disposed of at the ing the defined benefit schemes. The Parent Company ing principles mean that actuarial gains and losses in time of the change are not included in the statement of follows the provisions of the Swedish Law on Safe- defined benefit pension schemes are only entered in changes in working capital or in the change in balance guarding Pension Obligations and the regulations of the the income statement to the extent that they exceed sheet items recognised under financing activities. Swedish Financial Supervisory Authority, since this is a or are less than 10 percent of the higher of the pre- requirement for tax deduction rights. The main differen- sent value of the fair value of the defined benefit pen- The Parent Company’s accounting principles ces compared with the rules of IAS 19 are the manner sion obligation and the fair value of the plan assets. At The Parent Company’s annual report has been drawn in which the discount rate is established, the fact that the end of the year, net unrecorded actuarial gains and up in accordance with the Swedish Annual Accounts the defined benefit obligations are calculated based on losses stood at SEK –36 million (–37). Act (1995:1554) and the Swedish Financial Reporting current salary levels without taking assumptions regar- Board’s recommendation RFR 2, Accounting for Legal ding future salary increases into consideration, and the Financial reports 49

Impairment testing of goodwill and other assets Foreign exchange risk the income statement at the end of 2012 is shown in Goodwill impairment testing is carried out annually Transaction exposure Note 33, Derivative instruments. in connection with the year-end report or as soon as Transaction exposure derives from the Group’s sales changes indicate that impairment will arise, for exam- and purchases in various currencies. This foreign ex- Transaction exposure on 31 December ple a change in the business climate or a decision on change risk consists of both the risk of fluctuations the disposal or closure of operations. An Impairment is 12 month unhedged Change in Effect on in the value of financial instruments, i.e. accounts re- SEKm estimated net flows currency earnings carried out if the calculated value in use exceeds the ceivable and accounts payable, and the foreign ex- EUR 17 + / – 5% 1 carrying amount. An account of impairment testing for change risk in anticipated and contracted payment the year can be found in Note 19. flows. USD 37 + / – 5% 2 Other property, plant and equipment and intangi- In 2012, Nolato’s sales to countries outside Swe- Total 54 3 ble fixed assets are recognised at acquisition cost less den accounted for 75 percent (70). The largest flow accumulated depreciation and any impairment. De- currencies for the Swedish units were EUR and USD, preciation is carried out over the calculated useful life with EUR being net outward flows and USD being a At the end of the year, the Group had SEK 54 million in to an assessed residual value. The carrying amount of net inward flow. The Chinese operations had a net unhedged assessed currency flows, including effects the Group’s fixed assets is tested as soon as changed exposure largely in CNY/USD. from currency hedges. A change in the value of the circumstances show that there is an impairment re- Nolato carries out short-term currency hedging for Swedish krona of +/–5 percent would have an impact quirement. The value in use is measured as the antici- part of the Group’s net exposure in foreign currencies. of SEK 3 million on profit. pated future discounted cash flow primarily from the The aim of hedging the currency exposure is to even cash-generating unit to which the asset belongs, but out fluctuations in earnings. According to this policy, Translation exposure also in specific cases in relation to individual assets. A Nolato shall hedge the net flow of the forecast inward Foreign exchange risks also exist in the translation test of the carrying amount of an asset is also carried and outward flow of currencies over a rolling twelve- of foreign subsidiaries’ assets, liabilities and profit out in connection with a decision being made on dis- month period. In the event that the net flow in an indi- into the Parent Company’s functional currency. This is posal. The asset is included at the lower of the carry- vidual currency is less than SEK 10 million, there is no known as translation exposure. Nolato’s policy is that ing amount and the fair value after deductions for sell- hedging requirement. The hedging levels for the flows net investments in shareholders’ equity in foreign cur- ing expenses. in each currency shall be within the following intervals: rency shall not be currency-hedged. Translation differences reported in other comprehensive income are detailed in Note 27, Other reserves. Interval Hedged flow Note 4 Financial risk management 1–3 months in the future 60 – 80% Translation exposure of net assets 4–6 months in the future 40 – 60% Operations are conducted on the basis of a financial Net Swedish krona 7–9 months in the future 20 – 40% SEKm assets 5% stronger policy established by the Board, which specifies rules 10–12 months in the future 0 – 20% and guidelines for how the various financial risks shall Nolato Romania, RON – 2 0 be dealt with. The following significant risks are iden- Nolato USA, USD 17 – 1 tified in the financial policy: Foreign exchange risk, in- Individual investments in machinery are hedged at 100 Nolato Jaycare, GBP 67 – 3 terest rate risk, financing risk, and credit and liquidity percent in the event that the currency flow has a coun- tervalue exceeding SEK 1.5 million. The consolidated Nolato Beijing, CNY 197 – 10 risk. Currency and interest rate derivatives are used as Nolato Lovepac Converting, CNY 30 – 2 hedging instruments in accordance with the Board’s income statement includes exchange rate differences guidelines. of SEK – 2 million in operating profit. Nolato Lovepac Converting India, INR – 14 1 As a net borrower and through its extensive opera- Foreign exchange risks in financial flows relating Nolato EMC Prod. Center, MYR 1 0 tions outside Sweden, the Nolato Group is exposed to to loans and investments in foreign currencies can be Nolato Kuala Lumpur, MYR – 39 2 avoided by the Group’s companies borrowing in local various financial risks. Nolato’s financial policy speci- Nolato Hungary, EUR 132 – 7 currencies or hedging these flows. According to this fies guidelines for how these risks should be managed Cerbo Norge, NOK 2 0 within the Group. This policy outlines the aim, organi- policy, any such hedging or risk-taking is decided on Cerbo France, EUR 0 0 sation and allocation of responsibilities of the Group’s a case-by-case basis. Any hedging costs and any dif- financial operations, and is designed to manage the ferences in interest rate levels between countries are Total 391 – 20 described risks. The CFO initiates and, if necessary, taken into consideration in decisions on any possible proposes updates to the financial policy, and issues in- risk-taking in relation to financial flows. During the The Group has SEK 391 million in foreign net assets, ternal instructions in order to ensure compliance with year, there were exchange rate differences of SEK – 3 mainly in China, Hungary and the UK. A five percent- the policy within operating activities. The Board then million in net financial income/expense. age point appreciation of the Swedish krona would evaluates and adopts the proposed changes to the fi- At the end of 2012, the Group had the following cur- have an impact of SEK –20 million on the net assets in nancial policy on an annual basis or as necessary. rency hedges in relation to anticipated payment flows the Group. The Group’s financial management is centralised in EUR and USD for 2013. The derivatives used are within the Group’s financial department, and acts as futures and currency swaps. The volume and scope of Interest rate risk a staff service body. The Group staff is responsible for the contracts are stated below in nominal terms. Interest rate risk is the risk that the Group’s net inter- the Group companies’ external banking relationships, est income/expense will be weakened in the event of liquidity management, net financial income/expense changes to market interest rates. Since Nolato is a net and interest-bearing liabilities and assets, as well as Net exposure in sales and purchasing borrower, the Group is exposed to a risk of weakened for the Group-wide payment system, in the form of the in foreign currency net interest income/expense in the event of rising mar- internal bank. This centralisation involves significant ket interest rates. On 31 December, interest-bearing li- SEKm 12 month estimated Total Per- Average economies of scale, a lower financing cost and better net flows hedging centage rate abilities amounted to SEK 350 million (206). The fixed- internal control and management of the Group’s finan- EUR 30 13 43% 8.81 interest term of the Group’s loans and investments de- cial risks. Within the framework of the financial policy, USD 72 35 49% 6.88 termines how quickly interest rate changes have an impact on earnings. The Group’s policy states that the there is the opportunity to utilise foreign exchange and Total 102 48 47% interest rate instruments. During the year, trading was interest rate risk shall be limited by net borrowings (in- only carried out in currency derivatives. terest-bearing liabilities minus interest-bearing invest- The contracts are included at fair value in the balance ments) exceeding SEK 300 million having a maturity Market risk sheet, and the change in value is recognised in other structure in fixed-interest term intervals. Around half of Market risk relates to the risk arising through com- comprehensive income. When the contracts are real- the excess net debt shall fall due within a year, with the mercial flows in foreign currencies emerging in the ised, the accumulated change in value is booked to the remainder falling due between one and three years. operations (transaction exposure), financing of work- income statement. In 2012, the effect of the currency The target for investing excess liquidity is to achieve ing capital (interest rate risk) and foreign investments derivatives on operating profit was SEK 1 million (–2). the best possible return with regard to credit risk and (translation risk). The value of outstanding contracts not entered in the liquidity of the investments. The policy stipulates 50 Finansiella rapporter

that investments may only be carried out in interest- Interest-bearing net debt on 31 December bearing securities or bank deposits. The term of the investments may not exceed three months. Outstanding Future interest expense Term out- Remaining ﬁxed Avarage amount (SEKm) during the term outst. standing (mon) interest period (mon) interest (%) Breakdown of interest-bearing liabilities by currency Interest-bearing liabilities Bank loans, USD 85 0 3 3 1.3 GBP 37% SEK 39% Bank loans, GBP 130 0 2 2 1.1 Bank loans, SEK 40 0 2 2 2.1 Pension liability, SEK 95 — — — 4.9 Total 350 0 2.3

USD 24% Interest-bearing assets Cash and cash equivalents – 272 0 0 0.2

Interest rate effect on interest-bearing Total net debt 78 liabilities on 31 December

SEKm SEK USD GBP Total As part of the ﬁnancing of the Group’s subsidiaries, the Parent Company has issued internal loans in EUR to Hung- ± 0.0 ary and in USD to the USA. The repayment of these loans has been hedged according to the table below.

Subsidiary company Currency forward Selling price Maturity date Totalt Nolato Holding USA, Inc. 7 MUSD 6.5755 30 Dec 2013 – 1.0 Nolato Hungary Kft, Hungary 10 MEUR 8.7380 30 Dec 2013

– 2.0 As part of the financing of the Group’s Romanian subsidiary, the Parent Company has hedged an internal loan between Hungary and Romania using a currency swap of RON 9 million/EUR 2 million at the rate of 4.7017 maturing 30/12/2013. – 3.0 On 31 December the Group’s financial liabilities stood at SEK 923 million (628). The maturity structure for borrowings in relation to interest-bearing liabilities is shown in the table above. Non-interest-bearing liabilities are attributable primarily to accounts payable, with the term outstanding shown in the table below. – 4.0 Within Within Maturity < 1 month 1–3 months 4–12 months > 1 year Total An increase in the interest rate by one percentage Accounts payable 285 232 10 2 529 point based on the interest-bearing liabilities at the end of the year would result in additional interest expenses within the Group of SEK 4 million. Credit and liquidity risk The Group’s maximum exposure to credit risk is Credit risk can be divided up into commercial and fi- SEK 685 million (521), consisting of SEK 682 million Financing risk nancial counterparty risks. The commercial counter- (521) in accounts receivable and SEK 3 million (0) in Financing risk relates to the risk of the Group having party risk is the risk of one of the Group’s customers currency derivatives. problems with access to borrowings. In order to main- becoming insolvent and that sales forecasts entered tain financial flexibility and meet the Group’s capital into or hedged flows cannot be realised. In terms of Insurable risks requirements, contractual credit facilities are in place customers within Nolato Medical and Nolato Industrial, The Nolato Group has centralised insurance cover in with various contract lengths. In part, this enables the credit risk is limited to a certain degree through sales terms of property and liability. In certain countries a financing of fluctuations and organic growth, and in taking place in a large number of countries to a large local insurance policy is required, but in those cases part it enables the Group to stand prepared for large in- number of customers, which diversifies the risk. Nolato where this does not meet the Group’s minimum re- vestments and acquisitions. Telecom has a greater dependency on a small num- quirements there is coverage through an umbrella Nolato has total loan agreements of SEK 800 million, ber of customers. If any of these major customers were policy through Nolato AB’s insurance. of which SEK 350 million matures on 01/08/2014 and to suffer financial difficulties, the Group could sustain SEK 450 million matures on 31/12/2015. significant bad debt losses.

Note 5 Purchasing and sales between Parent Company and subsidiaries

Parent Company 2012 2011 Sales of services to subsidiaries 19 19 Purchase of services from subsidiaries – 3 – 10 Financial reports 51

Note 6 Operating segments

Information on operating segments suppliers. Nolato Industrial has a strong position in the Nordic region and parts of The Group’s operations are monitored by the highest decision-makers (the Group Central Europe. Development and production are carried out in Sweden, Hungary management) on the basis of the three operational business areas: Nolato Medical, and Romania. A more detailed presentation of the business area can be found on Nolato Telecom and Nolato Industrial. pages 22 – 25.

Nolato Medical develops and manufactures advanced polymer products and prod- Directly attributable items and items which could be distributed among the seg- uct systems for medical technology and pharmaceutical customers. The market ments in a reasonable and reliable manner have been included in the segments’ consists of large, global customers, featuring demanding development work, long profit, assets and liabilities. The recognised items in the operating segments are product life spans and stringent requirements in terms of quality, traceability and measured in accordance with the earnings, assets and liabilities monitored by the safety. Nolato Medical has a strong position in the Nordic region and a growing posi- Group management. tion in the rest of Europe and the USA. Development and production are carried out Internal pricing between the Group’s various segments is set according to the in Sweden, Hungary, the USA, the UK and China. A more detailed presentation of the arm’s length principle, i.e. between parties which are independent of each other, business area can be found on pages 14 –17. well-informed and have an interest in the transactions being carried out. The assets in each business area consist of all operating assets used by the oper- Nolato Telecom develops and manufactures system products for customers within ating segment, primarily intangible fixed assets arising through business combina- the mobile phone sector and products and systems for EMI shielding of electronics. tions, property, plant and equipment, inventories and accounts receivable. Liabili- The market consists of a few large, global companies with high technological de- ties assigned to operating segments include all operating liabilities, mainly accounts mands, extremely short development times and quick production start-ups. Nolato payable and accrued expenses. Telecom enjoys a strong position with selected customers. In 2012, development Unallocated items in the balance sheet consist primarily of financial assets, inter- and production were conducted in China, India, Malaysia and Sweden. A more de- est-bearing receivables and liabilities, provisions and deferred tax assets/liabilities. tailed presentation of the business area can be found on pages 18 – 21. Unallocated items in the income statement are attributable to financial income, financial expenses and tax expenses. Nolato Industrial develops and manufactures products and product systems in The segments’ investments in fixed assets include all investments other than in- plastic and rubber for customers in the automotive industry, hygiene, white goods, vestments in expendable equipment and low value equipment. All segments are es- gardening/forestry, furniture and other selected customer areas. The market is frag- tablished in accordance with Group accounting principles. mented and diversified, with a large number of customers and a large number of

Nolato Medical Nolato Telecom Nolato Industrial Elimination Total 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

External sales External sales 1,159 915 1,541 934 1,169 1,128 5 — 3,874 2,977 Internal sales 0 2 7 1 1 1 – 8 – 4 — — Net sales 1,159 917 1,548 935 1,170 1,129 – 3 – 4 3,874 2,977

Pro t Operating proﬁt (EBITA) 133 110 96 11 105 102 – 31 – 24 303 199 Amort. of intang. assets arising from company acq. – 13 – 6 — — – 3 – 3 — — – 16 – 9 Operating pro t 120 104 96 11 102 99 – 31 – 24 287 190 Financial income 0 3 Financial expenses – 15 – 10 Tax expenses for the year – 70 – 51 Pro t for the year 202 132

Receivables and liabilities The segments’ assets 1,079 818 686 484 709 706 – 157 – 38 2,317 1,970 Unallocated assets 1) 317 174 Total assets 1,079 818 686 484 709 706 – 157 – 38 2,634 2,144 The segments’ liabilities 254 184 631 322 258 267 – 201 – 105 942 668 Unallocated liabilities 487 325 Total liabilities 254 184 631 322 258 267 – 201 – 105 1,429 993

Other information Investments 248 56 36 23 47 69 0 1 331 149 Depreciation and amortisation 72 59 41 43 44 43 0 0 157 145 Impairment — — — 25 — — — — — 25 Signiﬁcant items, other than depr./amort. with no 6 – 13 3 1 – 5 – 3 —— 4 – 15 offsetting payments, impairment and provisions

1) The increase in 2012 is mainly due to higher cash and bank. 52 Financial reports

Cash ow from operations, allocated by segment 2012 2011 Nolato Nolato Nolato Nolato Nolato Nolato Medical Telecom Industrial Total Medical Telecom Industrial Total Cash ﬂow from operations before changes in working capital 191 137 146 474 162 78 142 382 Changes in working capital 15 69 – 21 63 – 22 8 – 19 – 33 Cash ow from operations 206 206 125 537 140 86 123 349 Unallocated items 1) – 61 – 103 Total cash ow from operations 476 246

Cash ow from investing activities, allocated by segment 2012 2011 Nolato Nolato Nolato Nolato Nolato Nolato Medical Telecom Industrial Total Medical Telecom Industrial Total Acquisition of ﬁxed assets 2) – 254 – 39 – 42 – 335 – 44 – 24 – 66 – 134 Sale of ﬁxed assets 0 0 — 0 — — — — Cash ow from investment activities – 254 – 39 – 42 – 335 – 44 – 24 – 66 – 134

1) For 2012, the Group’s change in working capital was SEK 89 million and, allocated by business area, according to the above SEK 63 million. The difference of SEK 26 million is included in the amount of SEK –61 million. Other unallocated items consist chiefly of operating loss of SEK – 31 million (with the Parent Company accounting for the majority) income tax paid at SEK –60 million and other items such as pension payments, other provisions paid, interest received/paid, including certain parts of the items not affecting cash flow. 2) Paid investments for the year in fixed assets, i.e. after adjustment for outstanding supplier invoices on the balance sheet date of SEK – 4 million (15).

Information about geographic markets In the Nordic region, which is the Group’s domestic market, the Group manufactures and sells products from all three business areas. Elsewhere in Europe, the Group has manufacturing and sales for the Nolato Medical and Nolato Industrial business areas. In Asia, the Group has manufacturing and sales in Nolato Telecom and Nolato Medical, and in North America in the Nolato Medical business area.

Sweden Other Nordic countr. Other Europe North America etc. Asia Group 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

External net sales 952 889 179 230 965 706 330 326 1,448 826 3,874 2,977 Assets 1,196 1,203 1 3 548 294 170 184 719 460 2,634 2,144 Average number of employees 865 896 2 2 696 404 159 175 6,699 4,019 8,421 5,496 Investments 79 71 — — 217 50 4 8 31 20 331 149

Note 7 Research and development Note 9 Information on remuneration to auditors

Group 2012 2011 The Company’s auditing rm has received remuneration: Development expenditure for customer-speciﬁc products 248 206 SEK thousand Group Parent Company Total 248 206 2012 2011 2012 2011 KPMG: The Group’s development expenditure relates to developing customer-speciﬁc Auditing 2,567 2,018 635 495 products in close collaboration with the customer. Product development costs are Audit business other than auditing 63 280 63 210 charged to the income statement in the cost of goods sold when they arise. Taxation duties 481 418 179 328 Other duties 1,850 733 187 671 Total 4,961 3,449 1,064 1,704 Note 8 Other operating income Auditing relates to reviewing the annual report and accounts, as well as the adminis- Group Parent Company tration of the Board of Directors and the President and CEO, other duties required of the company’s auditor and advisory services or other assistance resulting from observations 2012 2011 2012 2011 in relation to such review or carrying out such other duties. Bankruptcy payment — 27 —— Exchange rate gains — 3 — 5 Others 11 9 — — Total 11 39 — 5 Note 10 Other operating expenses

Group Parent Company 2012 2011 2012 2011 Effect of exch. rate on receivables/liab., net – 1 — – 1 — Acquisition expenses – 6 ——— Imp. int. rec. Group companies —— – 2 — Total – 7 — – 3 — Financial reports 53

Note 11 Personnel

Average number of employees 2012 2011 Number Of which men Number Of which men Parent Company Nolato AB, Torekov, Sweden 12 83% 12 83% Group companies Cerbo France Sarl, France 1 0% 1 0% Cerbo Norge A/S, Norway 2 50% 2 0% Nolato Beijing Ltd, China 6,089 29% 3,419 13% Nolato Cerbo AB, Trollhättan, Sweden 108 58% 112 48% Nolato EMC Production Center SDN BHD, Malaysia 36 25% 32 100% Nolato Gota AB, Götene, Sweden 103 66% 105 60% Nolato Hertila AB, Åstorp, Sweden 25 60% — — Nolato Hungary Kft, Hungary 468 47% 391 45% Nolato Jaycare Ltd, UK 205 77% — — Lövepac Converting Ltd, China 456 47% 456 45% Lövepac Converting Private Ltd, India 118 90% 112 63% Nolato Contour, Inc., USA 159 66% 175 46% Nolato Lövepac AB, Skånes Fagerhult, Sweden 35 71% 36 69% Nolato MediTech AB, Hörby, Sweden 201 57% 213 54% Nolato MediTor AB, Torekov, Sweden 61 56% 73 48% Nolato Plastteknik AB, Gothenburg, Sweden 96 71% 105 64% Nolato Polymer AB, Torekov, Sweden 82 79% 103 78% Nolato Romania Srl, Romania 23 35% 12 50% Nolato Silikonteknik AB, Hallsberg, Sweden 35 74% 26 58% Nolato Sunne AB, Sunne, Sweden 106 76% 111 74% Total 8,421 38% 5,496 29%

Costs for remuneration to employees Gender distribution of senior executives

2012 2011 Group 2012 2011 Group Men Women Men Women Salaries and remuneration, etc. 786 631 Board members 60 5 47 4 Pension expenses, defined benefit plans, Note 29 9 7 Managing directors 15 — 16 — Pension expenses, defined contribution plans, Note 29 63 57 Other senior executives 52 17 47 17 Social security contributions 154 117 Total 127 22 110 21 Total 1,012 812

There are 149 (131) senior executives within the Group. Expensed remuneration and beneﬁts for the senior executives during the year totalled SEK 112 million (93), of 2012 2011 which SEK 11 million (10) relates to bonus. Parent Company Men Women Men Women Board members 6 3 6 3 President and CEO 1 — 1 — Parent Company 2012 2011 Other senior executives 3 — 3 — Salaries and remuneration 25 18 Total 10 3 10 3 Pension expenses, deﬁned contribution plans 5 6 Social security contributions 8 5 Total 38 29

There are 4 (4) senior executives at the Parent Company. Expensed remuneration and beneﬁts for senior executives at the Parent Company during the year totalled SEK 15 million (14), of which SEK 4 million (1) relates to bonus. Of the Parent Com- pany’s pension expenses, SEK 1.8 million (1.7) relates to the Board and the President and CEO. The Company’s outstanding pension liabilities and obligations in relation to the Board and the President and CEO was SEK 0 million (0).

54 Financial reports

Remuneration to the Board and senior executives

Remuneration and other bene ts during 2012 Base salary/ Other Pension Other SEK thousand Bonus 2 Stock options progr. Total Directors’ fee 1 beneﬁts 3 premiums remuneration 4 Chairman of the Board, Fredrik Arp 320 — — — — — 320 Board member, Gun Boström 140 — — — — — 140 Board member, Erik Paulsson 140 — — — — — 140 Board member, Henrik Jorlén 170 — — — — — 170 Board member, Lars-Åke Rydh 190 — — — — — 190 Board member, Anna Malm Bernsten 140 — — — — — 140 President and CEO, Hans Porat 4,392 1,757 676 142 1,791 87 8,845 Other senior executives (3 people) 5 7,110 2,137 — 414 1,593 59 11,313 Total 12,602 3,894 676 556 3,384 146 21,258

Remuneration and other bene ts during 2011 Base salary/ Other Pension Other SEK thousand Bonus 2 Stock options progr. Total Directors’ fee 1 beneﬁts 3 premiums remuneration 4 Chairman of the Board, Fredrik Arp 320 — — — — — 320 Board member, Gun Boström 140 — — — — — 140 Board member, Erik Paulsson 140 — — — — — 140 Board member, Henrik Jorlén 170 — — — — — 170 Board member, Lars-Åke Rydh 190 — — — — — 190 Board member, Anna Malm Bernsten 140 — — — — — 140 President and CEO, Hans Porat 4,224 — 5,853 133 1,712 115 12,037 Other senior executives (3 people) 5,998 1,158 — 270 1,965 56 9,447 Total 11,322 1,158 5,853 403 3,677 171 22,584

1 Including remuneration for committee work. 2 Bonus pertains to expensed remuneration for the ﬁnancial year, payable in the following year. 3 Other beneﬁts pertains to company cars. 4 Other remuneration relates to the President and CEO and other senior executives regarding previous holiday entitlements paid, and other remuneration. 5 Four people from 15 October 2012.

Principles for remuneration and bene ts percent of base salary. At the same time, the relevant Pensions A director’s fee is paid to the Chairman and members profit centre must report positive earnings. In 2012, the The retirement age for the President and CEO and oth- of the Board as decided by the Annual General Meet- outcome for the President and CEO was 40 percent of er senior executives is 65. The President and CEO’s ing. No director’s fee is paid to employees of the Group base salary (0) and for other senior executives 27– 40 pension premium amounts to 40 percent of pension- or to employee representatives. Remuneration for the percent of base salary (19). able salary, and follows a defined contribution pension President and CEO and other senior executives is made scheme. Variable remuneration does not qualify as up of a base salary, variable remuneration, other ben- Stock options programme pensionable income. For 2012, the pension premium efits and a pension. Other senior executives are indi- In the Group, there is a cash-based synthetic stock op- was 40 percent of base salary (40). viduals who, together with the President and CEO, con- tions programme for the President and CEO. The pro- Other senior executives have defined contribution stitute the Group management. In 2012, Group man- gramme covers the period 01/04/2011 to 31/03/2014. pension schemes. For 2012, the average pension pre- agement comprised three people and four people after The agreement entitles the President and CEO to a mium was 22 percent of base salary (33). Variable re- 15 October, besides the CEO. They are Executive Vice stock yield-based bonus, the value of which amounts muneration does not qualify as pensionable income. President and CFO Per-Ola Holmström, President of to the difference between the average closing price of Nolato Medical Christer Wahlquist, President of Nolato the Nolato share in Q1 2014, and 83.74 multiplied by Severance pay Telecom Jörgen Karlsson and, as of 15 October, Presi- 150,000, although a maximum of 50 percent of the ac- The Company and the President and CEO have agreed dent of Nolato Industrial Johan Arvidsson. For further cumulated monthly ordinary gross salary expensed on a notice period of six months if the President and information, see page 80. during the period 1 April 2011 to 31 March 2014. The CEO resigns of his own accord. In the event of termi- President and CEO did not make any cash payment nation by the Company, a notice period of 24 months Preparatory and decision-making procedure and was allotted the 150,000 options directly when the applies. Other senior executives shall provide a notice The Board of Directors has appointed a Remuneration agreement commenced. period of six months. In the event of termination by the Committee, consisting of the Chairman of the Board The programme is expensed by means of alloca- Company, a notice period of 12-24 months applies. and one other Board member. The committee has pro- tion at ongoing revaluation of the liability to fair value, Any other income that is received during the notice posed, and the Board of Directors has approved, the measured according to the Black & Scholes model and period shall be deducted from the salary and other re- current principles for variable remuneration. The com- taking into account the terms and conditions of the muneration payable during the notice period. No such mittee has made decisions on all remuneration and programme until payment is made. This remuneration deduction shall be made for the President and CEO. benefits for the President and CEO, which have been can only be awarded to the President and CEO after the Both the President and CEO and other senior execu- presented to and approved by the Board. The commit- programme matures. The cost of the programme for tives collect base salary and other benefits during the tee has approved the remuneration of the Group man- the year (including social security contributions) has notice period. There is no remuneration after the no- agement. been charged to the profit in the amount of SEK 676 k tice period. (225) and is recognised as an interim liability in the Bonus Parent Company. At the end of 2012, the total value of Bonus paid to the President and CEO and other senior the bonus programme was deemed to be SEK 901 k executives is based on the outcome of profit and re- (225) including social security contributions. turn on capital employed. The maximum outcome is 40 Financial reports 55

Note 12 Depreciation, amortisation and impairment Note 13 Proﬁt from participations in Group companies

Depreciation, amortisation and impairment are included in operating expenses Parent Company 2012 2011 as follows: Dividend received from Group companies 16 153 Group Parent Company Anticipated dividend from Group companies 35 — 2012 2011 2012 2011 Impairment of participations in Group companies – 7 — Customer relations 14 9 — — Liquidation profit from Group companies — 9 Tenancy rights 0 0 — — Value adjustment of Group company receivables — 0 Capitalised development expenditure 0 2 — — Total 44 162 Software 2 — 0 — Buildings and land 16 15 — — Machinery and other technical facilities 110 135 — — Note 14 Financial income Equipment, tools, fixtures and fittings 15 9 0 0 Impairment int. rec. Group companies —— – 2 — Group Parent Company Total 157 170 – 2 0 2012 2011 2012 2011 In 2011, an impairment on production equipment in the amount of SEK 25 million Interest income, Group companies —— 25 17 was made in Nolato Telecom. Interest income, bank deposits 0 3 0 0 Exchange rate differences 0 0 — 1 Depreciation, amortisation and impairment have been allocated as follows: Total 0 3 25 18 Group Parent Company 2012 2011 2012 2011 All interest income is attributable to financial assets, which are measured at amor- Cost of goods sold 137 158 — — tised cost. Selling expenses 17 10 — — Administrative expenses 3 2 0 0 Other operating expenses —— – 2 — Note 15 Financial expenses Total 157 170 – 2 0 Group Parent Company Impairment for the year 2011 of SEK 25 million is included in the cost of goods sold. 2012 2011 2012 2011 Interest expenses, Group companies — — – 1 – 3 Interest expenses, credit institutions – 4 – 6 – 3 – 2 Interest expenses, pension liabilities – 5 – 4 — — Impairment non-curr loan rec., Gp co.s* — — – 21 — Other financial expenses – 3 0 – 3 – 1 Insurance recourse ** — — — – 15 Exchange rate differences – 3 0 – 1 — Total – 15 – 10 – 29 – 21

* The Parent Company’s long-term loan receivable on the subsidiary in India has been impaired to SEK 0. ** Relates to a bankruptcy payment of a previously credit-insured customer. All interest expenses are attributable to ﬁnancial liabilities, which are measured at amortised cost, with the exception of interest expenses on pension liabilities.

Note 16 Appropriations

Parent Company 2012 2011 Group contributions received 174 170 Group contributions paid – 6 – 5 Reversal of tax allocation reserve 28 — Allocation to tax allocation reserve – 47 – 35 Total 149 130 565656 Financial reports

Note 17 Tax

Recognised in the income statement Reconciliation of effective tax

Group 2012 2011 Group 2012 2011 Current tax expenses Pro t before tax 272 183 Tax expenses for the period – 75 – 50 Tax according to applicable Parent Company tax rate – 71 – 48 Adjustment for tax attributable to previous years – 1 0 Effect of other tax rates for foreign Group companies – 4 – 12 – 76 – 50 Non-deductable expenses – 4 – 3 Non-taxable income — 10 Deferred tax income/expense Tax attributable to previous years – 1 2 Deferred tax in relation to temporary differences – 1 – 7 Effect of change in tax rates 15 — Deferred tax attributable to unutilised loss carry-forwards – 8 6 Effect of non-capitalised deﬁcits arising during the year – 4 0 Deferred tax as a result of tax rate changes 15 — Standard interest on tax allocation reserve – 1 0 6 – 1 Recognised effective tax – 70 – 51

Total reported Group tax expense – 70 – 51 The tax rate applicable to the Group’s income is 26.3%.

Parent Company 2012 2011 Parent Company 2012 2011 Current tax expense (–) / income (+) Pro t before tax 156 267 Tax expense for the period – 37 – 28 Tax according to applicable Parent Company tax rate – 41 – 70 Adjustment for tax attributable to previous years — – 1 Non-deductable expenses – 8 – 3 – 37 – 29 Non-taxable income 12 45 Tax attributable to previous years — – 1 Deferred tax income/expense Effect of changed tax rates – 1 — Deferred tax in relation to temporary differences – 2 0 Standard interest on tax allocation reserve – 1 — Recognised effective tax – 39 – 29 Total reported Parent Company tax expense – 39 – 29

Recognised in the balance sheet

Deferred tax assets Deferred tax liabilities Net Group 2012 2011 2012 2011 2012 2011 Intangible assets — — 24 15 – 24 – 15 Property, plant and equipment 21 23 47 54 – 26 – 31 Financial assets — — — 0 — 0 Inventories 7 7 — — 7 7 Accounts receivable 1 2 — — 1 2 Provisions for pensions 5 4 — — 5 4 Tax allocation reserves — — 40 44 – 40 – 44 Others 3 14 5 21 – 2 – 7 Loss carry-forwards 0 9 — — 0 9 Tax assets/liabilities 37 59 116 134 – 79 – 75 Offsetting – 2 – 19 – 2 – 19 — — Tax assets/liabilities, net 35 40 114 115 – 79 – 75

Unrecognised deferred tax assets Deferred tax assets have not been recognised in the Group in relation to loss carry-forwards totalling SEK 47 million (36). These loss carry-forwards relate to the operations in Malaysia and India, and it is unlikely that they will be able to be used against future taxable gains.

Parent Company 2012 2011 Other provisions 1 1 Others 3 5 Total deferred tax assets 4 6 Financial reports 57

Change in deferred tax in temporary differences and loss carry-forwards

Balance as at Recognised in Recognised against Acquisitions Balance as at Group 1 Jan 2011 proﬁt for the year other compreh. income of business 31 Dec 2011 Intangible assets – 14 – 1 — — – 15 Property, plant and equipment – 41 7 3 — – 31 Financial assets – 1 1 — — — Inventories 8 – 2 1 — 7 Accounts receivable 2 0 — — 2 Provisions for pensions 3 1 — — 4 Tax allocation reserves – 35 – 9 — — – 44 Miscellaneous – 3 – 4 — — – 7 Loss carry-forwards 2 6 1 — 9 Total – 79 – 1 5 — – 75

Balance as at Recognised in Recognised against Acquisitions Balance as at Group 1 Jan 2012 proﬁt for the year other compreh. income of business 31 Dec 2012 Intangible assets – 15 1 — – 10 – 24 Property, plant and equipment – 31 7 – 1 – 1 – 26 Financial assets — — — — — Inventories 7 — — — 7 Accounts receivable 2 – 1 — — 1 Provisions for pensions 4 1 — — 5 Tax allocation reserves – 44 4 — — – 40 Miscellaneous – 7 3 — 2 – 2 Loss carry-forwards 9 – 9 — — — Total – 75 6 – 1 – 9 – 79

Balance as at Recognised in Recognised against Balance as at Parent Company 1 Jan 2011 proﬁt for the year shareholders’ equity 31 Dec 2011 Other provisions 1 0 — 1 Others 5 0 — 5 Total 6 0 — 6

Balance as at Recognised in Recognised against Balance as at Parent Company 1 Jan 2012 proﬁt for the year shareholders’ equity 31 Dec 2012 Other provisions 1 0 — 1 Others 5 – 2 — 3 Total 6 – 2 — 4

Tax attributable to other comprehensive income Group 2012 2011 Deferred tax attributable to cash ﬂow hedges 0 0 Exchange rate differences in deferred tax – 1 5 Total – 1 5

Note 18 Expenses allocated by type of cost

Group Parent Company 2012 2011 2012 2011 Raw materials and supplies – 1,984 – 1,411 — — Changes in inventories of ﬁnished goods and work in progress 62 – 1 — — Costs for remuneration to employees – 1,012 – 812 – 38 – 29 Energy costs – 116 – 93 0 — Other costs – 391 – 339 – 12 – 17 Depr./amortisation and imp. losses – 157 – 170 – 2 0 Total – 3,598 – 2,826 – 52 – 46 585858 Financial reports

Note 19 Intangible assets

Group Software Tenancy rights Customer rel.1 Cap. dev. exp. Goodwill1 Total

ACQUISITION COST On 1 January 2011 — — 79 27 386 492 Investments — — — 3 — 3 Acquisitions — — — 0 — 0 Translation differences — — 0 0 1 1 On 1 January 2012 — — 79 30 387 496 Investments 0 2 — 0 — 2 Reclassiﬁcations 12 4 10 – 26 — — Acquisitions — — 41 — 102 143 Translation differences — – 1 – 2 – 1 – 6 – 10 On 31 December 2012 12 5 128 3 483 631 ACCUMULATED DEPRECIATION/AMORTISATION On 1 January 2011 — — – 32 – 19 — – 51 Depreciation/amortisation for the year — — – 9 – 2 — – 11 Translation differences — — 0 0 — 0 On 1 January 2012 — — – 41 – 21 — – 62 Depreciation/amortisation for the year – 2 0 – 14 0 — – 16 Reclassiﬁcations – 5 – 4 – 9 18 — — Translation differences — 0 0 — — 0 On 31 December 2012 – 7 – 4 – 64 – 3 — – 78 Book value 31 December 2011 — — 38 9 387 434 Book value 31 December 2012 5 1 64 — 483 553 1 Acquired

Goodwill impairment testing Goodwill is allocated to Group segments as follows: Goodwill is impairment-tested annually and when there is an indication of impairment. The test is performed at the lowest cash-generating unit level, or groups of Group 2012 2011 cash-generating units on which these assets can be verified. In most cases, this Nolato Medical 380 284 means the acquisition level. However, following integration, they can be transferred Nolato Industrial 103 103 to part of another unit. For Nolato Medical, impairment testing has been performed Total 483 387 at the segment level, and by legal company for Nolato Industrial. An impairment is recognised if the carrying amount exceeds the recoverable value. The recoverable value is established based on calculations of useful life. A discounted cash flow mod- Assumptions for establishing the discount rate el is used to estimate useful life. The estimate includes an important source of un- 2012 2011 certainty because the estimates and assumptions used in the discounted cash flow model contain uncertainty about future events and market circumstances, so the ac- Risk-free rate, % 1.7 /1.9 1.9 – 2.0 tual outcome can differ significantly. The estimates and assumptions have, however, Tax rate, % 22 /24 26 – 40 been reviewed by the management and coincide with internal forecasts and future Forecast period 3 years 3 years outlook for the operations. Growth after forecast period, % 2 2 The discounted cash flow model includes forecasting future cash flow from operations including estimates regarding income volumes, production costs and require- Applied discount rate before tax, % 8.5/9.2 8.0 – 9.6 ments in terms of capital employed. Several assumptions are made, the most significant being the growth rate of income and the discount rate. In the impairment test in each segment, the discount rate has essentially been con- Forecasts of future operating cash flows are based on the following: structed segment by segment. The various legal companies in each segment are – budgets and strategic plans for a three-year period corresponding to manage- relatively similar in size, have the same type of customer segments with similar be- ment’s estimates, as adopted by the board of each legal company, of future revenues haviour, and similar types of products. Therefore, the risk level for the legal com- and operating expenses, with the help of the outcome of previous years, general panies is also deemed to be more or less the same and the assumptions given for market conditions, industry trends and forecasts and other available information. Nolato Industrial are essentially applicable to the companies included in the seg- – after this, a final value is calculated based on a growth factor that corresponds to ment. Impairment-tested operations in the Group are mainly in Sweden, the UK and expected inflation in the country where the asset is used. the USA. Therefore, test assumptions have been relatively homogeneous, with ad- Impairment-tested operations in the Group are mainly in Sweden, the UK and the justments for country-specific parameters. Even in a comparison between the differ- USA. Both of these countries are deemed to have largely similar expected inflation, ent segments, it is deemed that the operations, markets and customers are relatively which is in line with the goals of central banks and similar institutions. It is assumed similar. Historical outcomes, risks and changes have been relatively similar in both of that relevant markets will grow in line with general inflation. these business areas, which supports this conclusion, leading to assumptions for the Forecasts of future cash flow from operations are adjusted to present value with a tests, for instance risk premiums, being essentially the same for both segments. suitable discount rate. As a starting point, the discount rate takes the Nolato Group’s Using these assumptions, the recoverable value exceeds the carrying amount of marginal borrowing rate adjusted for the risk premium in the country concerned, if all cash-generating units, and there is no impairment. Sensitivity analyses have been applicable, and the systematic risk in the cash-generating unit at the time of meas- performed to evaluate whether reasonable unfavourable changes within the most urement. Management bases the discount rate on the inherent risk in the business in relevant parameters would lead to an impairment. The analyses focused on a dete- question and in similar industries. rioration in the average growth rate and an increase of 1 percentage point in the discount rate. These analyses did not give rise to any impairment indications. Financial reports 59

Parent Company 2012 2011 Note 21 Equipment Accumulated acquisition costs on 1 January 1 — Investments 0 1 Parent Company 2012 2011 Accumulated acquisition costs on 31 December 1 1 Accumulated acquisition costs on 1 January 2 2 Acquisitions — 0 Accumulated depreciation/amortisation on 1 January — — Accumulated acquisition costs on 31 December 2 2 Depreciation/amortisation 0 — Accumulated depreciation/amortisation on 31 December 0 — Accumulated depreciation on 1 January – 2 – 2 Depreciation 0 0 Carrying amount 1 1 Accumulated depreciation on 31 December – 2 – 2

Carrying amount 0 0 Note 20 Leasing

Financial leases

Group 2012 2011 Acquisition cost, plant and machinery 2 — Accumulated depreciation, plant and machinery – 1 — Carrying amount 1 —

The Group’s financial leasing agreements are mainly attributable to machinery. Leasing fees charged to income for the year amounted to SEK 1 million (0), and are reported in consolidated operating expenses. During the financial year, financial leasing agreements worth SEK 0 million (0) fell due. These financial leasing agreements are restricted by retention of title.

Operating leases Operating leasing agreements consist mainly of rental contracts for production premises. Leasing fees expensed for the year totalled SEK 32 million (32). The variable fees included in this do not add up to any signiﬁcant amount. The operating leasing agreements are not restricted by index clauses or such terms that bring entitlement to extend or acquire the objects hired. However, there are restrictions on the right of disposal.

Leasing agreements where the Company is the lessee Financial leases Operating leases Non-cancellable lease payments total: Within 1 year 1 47 Between 1 and 5 years 0 177 Longer than 5 years — 25 Total 1 249

Parent Company The Parent Company does not have any significant operational leasing agreements. The Parent company rents office premises internally from Nolato Polymer AB. There are no financial leasing agreements. 606060 Financial reports

Note 22 Property, plant and equipment

Group Buildings Machinery and other Equipment, tools, Construction in progress Total and land technical facilites ﬁxtures and ﬁttings and advance payments

ACQUISITION COST On 1 January 2011 464 1,760 153 21 2,398 Investments 13 66 9 58 146 Sales/disposals — – 121 – 20 0 – 141 Reclassifications 0 – 39 57 – 18 0 Translation differences 0 34 0 1 35 On 1 January 2012 477 1,700 199 62 2,438 Investments 21 67 9 55 152 In new companies on acquisition — 28 6 — 34 Sales/disposals — – 23 – 2 — – 25 Reclassifications 13 35 13 – 67 – 6 Translation differences – 6 – 35 – 2 – 3 – 46 On 31 December 2012 505 1,772 223 47 2,547 ACCUMULATED DEPRECIATION On 1 January 2011 – 234 – 1,317 – 129 — – 1,680 Depreciation for the year – 15 – 110 – 9 — – 134 Impairment losses for the year — – 25 — — – 25 Sales/disposals — 121 20 — 141 Reclassifications — 40 – 40 — — Translation differences 0 – 34 0 — – 34 On 1 January 2012 – 249 – 1,325 – 158 — – 1,732 Depreciation for the year – 16 – 110 – 15 — – 141 Sales/disposals — 20 1 — 21 Reclassifications – 4 8 2 — 6 Translation differences 1 31 2 — 34 On 31 December 2012 – 268 – 1,376 – 168 — – 1,812 Book value 31 December 2011 228 375 41 62 706 Book value 31 December 2012 237 396 55 47 735

Impairment Impairment for 2011 of machinery and other technical facilities in the amount of SEK 25 million relates to production equipment at Nolato Telecom. All impairment was charged to the cost of goods sold in the consolidated income statement.

Assets with retention of title The Group’s carrying amounts for machinery and other technical facilities include assets with ﬁnancial leasing – see Note 20. These assets have a retention of title of SEK 1 million (0). Financial reports 61

Note 23 Participations in Group companies

Parent Company 2012 2011 Information on subsidiaries’ corporate identity numbers and registered of ces Acquisition cost on 1 January 833 831 A/S Cerbo Norge 926620762 Norway Acquisitions 70 — AB Cerbo Group 556534-6870 Trollhättan, SE Shareholders’ contribution 2 2 C A Portsmouth Ltd 4338806 UK Disposals — — Cerbo France Sarl 494591092 RCS France Accumulated acquisition cost on 31 December 905 833 Kartongprodukter Berglund AB 556216-6818 Trollhättan, SE Lovepac Converting (Beijing) Co., Ltd. 110000410302897 China Accumulated impairment losses on 1 January – 348 – 348 Lovepac Converting Private Ltd U24297AP2009PTC064510 India Impairment losses for the year – 7 — Nolato Alpha AB 556164-1050 Kristianstad, SE Accumulated impairment losses on 31 December – 355 – 348 Nolato Cerbo AB 556054-9270 Trollhättan, SE Nolato Contour Inc 39-1683461 USA Carrying amount 550 485 Nolato EMC Production Center Sdn Bhd 876976-W Malaysia Nolato Gota AB 556054-1301 Götene, SE Nolato Hertila AB 556545-5549 Åstorp, SE Particip. interest Carr. amount Nolato Holding USA Inc 27-3000125 USA The Parent Company’s holdings 2012 2011 2012 2011 Nolato Holdings UK Ltd 8010209 UK AB Cerbo Group, Trollhättan, Sweden 100% 100% 117 117 Nolato Hungary Kft 0809005432 Hungary Lövepac Converting Ltd, China 100% 100% 9 9 Nolato Jaycare Ltd 598957 UK Lövepac Converting Private Ltd, India 100% 100% 0 5 Nolato Kuala Lumpur Sdn Bhd 702672-A Malaysia Nolato Alpha AB, Kristianstad, Sweden 100% 100% 12 12 Nolato Lövepac AB 556120-6052 Sk Fagerhult, SE Nolato EMC Production Center Sdn Bhd, Malaysia 100% 100% 0 0 Nolato MediTech AB 556309-0678 Hörby, SE Nolato Holding USA Inc., USA 100% 100% 0 0 Nolato MediTor AB 556820-3565 Torekov, SE Nolato Gota AB, Götene, Sweden 100% 100% 79 79 Nolato Mobile Comm.Pol. (Beijing) Ltd 110000410152952 China Nolato Hertila AB, Åstorp, Sweden 100% 100% 1 1 Nolato Plastteknik AB 556198-4385 Gothenburg, SE Nolato Holdings UK Ltd, UK 100% 100% 70 — Nolato Polymer AB 556380-2890 Torekov, SE Nolato Hungary Kft, Hungary 100% 100% 46 46 Nolato Romania S.R.L. B24287770 Romania Nolato Kuala Lumpur Sdn Bhd, Malaysia 100% 100% 0 0 Nolato Silikonteknik AB 556137-5837 Hallsberg, SE Nolato Lövepac AB, Skånes Fagerhult, Sweden 100% 100% 10 10 Nolato Sunne AB 556101-2922 Sunne, SE Nolato MediTech AB, Hörby, Sweden 100% 100% 19 19 Nolato Torekov AB 556042-2858 Torekov, SE Nolato MediTor AB, Torekov, Sweden 100% 100% 1 1 Nolato Mobile Comm.Polymers (Beijing) Ltd, China 100% 100% 91 91 Nolato Plastteknik AB, Gothenburg, Sweden 100% 100% 37 37 Nolato Polymer AB, Torekov, Sweden 100% 100% 5 5 Nolato Produktions AB, Götene, Sweden 100% 100% 0 — Nolato Romania S.R.L., Romania 100% 100% 0 0 Nolato Silikonteknik AB, Hallsberg, Sweden 100% 100% 8 8 Nolato Sunne AB, Sunne, Sweden 100% 100% 33 33 Nolato Torekov AB, Torekov, Sweden 100% 100% 12 12 Carrying amount 550 485

Particip. interest Shares owned via Group companies 2012 2011 A/S Cerbo Norge, Norway 100% 100% C A Portsmouth Ltd, UK 100% — Cerbo France Sarl, France 100% 100% Kartongprodukter Berglund AB, Trollhättan, Sweden 100% 100% Nolato Cerbo AB, Trollhättan, Sweden 100% 100% Nolato Contour Inc, USA 100% 100% Nolato Jaycare Ltd, UK 100% — 626262 Financial reports 62

Note 24 Inventories Note 26 Share capital

Group 2012 2011 The share capital of Nolato AB totals SEK 132 million, divided into 26,307,408 Raw materials and supplies 135 104 shares. Of these, 2,759,400 are A shares and 23,548,008 are B shares. Each A share Products in manufacturing 51 42 entitles the holder to ten votes, while a B share entitles the holder to one vote. All Finished goods and goods for resale 102 88 shares have equal rights to the assets and earnings of the company. Work in progress — 2 Total 288 236 Number of shares Quotient value Share capital Share capital, 31 Dec 2011 26,307,408 SEK 5 SEK 131,537 k During the year, the Group impaired inventories by SEK 40 million (7). Share capital, 31 Dec 2012 26,307,408 SEK 5 SEK 131,537 k Impairment losses for the year are included in Cost of goods sold in the income statement. During the year, reversed impairment losses totalled SEK 32 million (17). The re- Capital management versal of previously impaired stocks is due to the fact that these items could be sold The Group aims to have a sound capital structure and ﬁnancial stability. or were no longer deemed obsolete. “Capital” is deﬁned as the Group’s total reported shareholders’ equity, i.e.:

2012 2011 Share capital 132 132 Note 25 Accounts receivable Other capital contributed 228 228 Translation reserve 3 20 Group 2012 2011 Hedging reserve 1 0 Accounts receivable 688 528 Retained earnings, incl. net income 841 771 Deduction: Provision for decline in value of accounts receivable – 6 – 7 Total capital 1,205 1,151 Carrying amount 682 521 The Board aims to maintain a good balance between a high return which can be During the year, the Group reversed SEK 4 million (8) of provisions for decline in val- achieved through higher borrowing and the advantages and security offered by a ue of accounts receivable as at 1 January. Provisions for the year totalled SEK 3 mil- sound capital structure. The Board sets the Group’s financial targets each year on the lion (7). The credit quality of accounts receivable not due and not impaired, and of basis of this. These targets should be seen as average figures over a business cycle. other financial receivables is deemed to be good. The extent to which these targets were achieved for 2012 is shown below.

Total accounts receivable 2012 2011 Total Not due Due Financial targets Outcome Financial targets Outcome ≤15 days 16–60 days > 60 days EBITA margin >8% 7.8% >8% 6.7% 2012 688 560 99 26 3 Return on capital employed >15% 19.5% >15% 13.9% 2011 528 428 70 24 6 Equity/assets ratio >35% 46.0% >35% 54.0% Accounts receivable, including provisions for decline in value Total Not due Due The Board’s dividend proposal shall take into consideration Nolato’s long-term de- ≤15 days 16–60 days > 60 days velopment potential, ﬁnancial position and investment requirements. The Board’s 2012 682 558 97 25 2 dividend policy means that the Board shall intend to propose a dividend which corre- 2011 521 422 70 24 5 sponds on average to at least 35 percent of proﬁt after tax. For 2012, the Board proposes SEK 3.50 per share (3.00) plus an extra dividend of SEK 2.50 per share (2.00), At the end of 2012 and the end of 2011, there was no credit insurance. totalling SEK 6.00 per share (5.00) or SEK 158 million (132), corresponding to a pay- out ratio of 78 percent (100).

All Parent Company credits are subject to capital requirements, as detailed in Note 28 on page 63. Financial reports 63

Note 27 Other reserves Note 28 Borrowings

Group Hedging Transl. Total Group Parent Company reserve reserve 2012 2011 2012 2011 Balance on 1 January 2011 2 20 22 Short-term Cash ow hedges: Bank loans 254 113 254 0 Gain from fair value measurement during the year 1 — 1 Total borrowings 254 113 254 0 Tax from fair value measurement 0 — 0 Transfers to the income statement – 3 — – 3 Maturity dates for bank loan borrowings: Tax on transfers to the income statement 0 — 0 Within 1 year 254 113 254 0 Translation differences — 0 0 Between 2 and 5 years — — — — Balance on 31 December 2011 0 20 20 More than 5 years — — — — Total 254 113 254 0 Balance on 1 January 2012 0 20 20 Cash ow hedges: Amounts reported, by currency: Gain from fair value measurement during the year 1 — 1 CNY — 23 — — Tax from fair value measurement 0 — 0 GBP 129 — 129 — Transfers to the income statement 0 — 0 SEK 40 0 40 0 Tax on transfers to the income statement 0 — 0 USD 85 90 85 — Translation differences — – 17 – 17 Total 254 113 254 0 Balance on 31 December 2012 1 3 4

Hedging reserve Interest-bearing liabilities The hedging reserve includes the effective portion of the accumulated net change At the end of the year, the Group’s interest-bearing liabilities excluding pension lia- in fair value of a cash flow hedging instrument attributable to hedged transactions bility amounted to SEK 254 million (113). The average interest rate was 1.3% (2.6). which have not yet occurred. Transfers to the income statement of cash flow hedges The average fixed-interest term was 2 months (4). have been recognised against other operating expenses.

Translation reserve Group Parent Company The translation reserve includes all exchange rate differences arising on convert- 2012 2011 2012 2011 ing financial statements from foreign operations which have produced their financial Liabilities with floating interest rates 254 113 254 0 statements in a currency other than that in which the Group’s financial statements Total liabilities 254 113 254 0 are produced. The Parent Company and the Group present their financial statements in Swedish kronor. Terms and repayment periods Total credit lines granted within the Group amount to SEK 800 million (700). Of this amount, SEK 350 million (350) matures on 01/08/2014 and SEK 450 million on 31/12/2015. Pledged assets for the credit facilities amount to SEK 0 million (0). The credit facilities are conditional upon subsequent covenants. These include requirements in terms of financial key ratios for the Group, including net debt in relation to operating profit before depreciation/amortisation (EBITDA) and the equity/assets ratio. As at 31 December, all loan terms were met. All loan agreements can be terminated by the other party in the event of any significant change in ownership control of the Company. 646464 Financial reports

Note 29 Provisions for pensions and similar obligations

Group SEK thousand 2012 2011 Changes in net debt for de ned bene t pension schemes Defined benefit pension schemes 93,875 91,900 as reported in the balance sheet are as follows: Other pension schemes 1,253 1,339 Group SEK thousand 2012 2011 Total 95,128 93,239 Net debt on 1 January accord. to the balance sheet adopted 91,900 91,296 Net expense reported in the income statement 7,234 5,630 De ned bene t pension schemes Pension payments and benefits redeemed – 5,259 – 5,026 In the Group, there are defined benefit pension schemes in which employees are en- Net debt on 31 December 93,875 91,900 titled to remuneration after leaving their position based on their final salary and vesting period. Defined benefit pension schemes in the Group only exist in Sweden. Important actuarial assumptions on the balance sheet date The amounts reported in the balance sheet have been calculated as follows: (weighted averages): Group SEK thousand 2012 2011 Group % 2012 2011 Present value of unfunded obligations 129,901 128,837 Discount rate 3.40 3.60 Unrecognised actuarial losses – 36,026 – 36,937 Future annual salary increases 3.20 3.20 Net debt in the balance sheet 93,875 91,900 Future annual pension increases 1.90 2.00 Employee turnover 5.00 5.00

Fair value of the de ned bene t pension schemes: Historical values: Group SEK thousand 2012 2011 Present value of unfunded obligations on 31 December: Balance on 1 January 128,837 113,597 Beneﬁts vested during the period 1,228 558 2012 2011 2010 2009 2008 Interest expenses 4,574 4,247 129,901 128,837 113,597 114,306 111,779 Beneﬁts redeemed – 27 – 187 Gain (+)/loss (–) from the adjustment of experience-based parameters: Pension payments – 5,232 – 4,839 Actuarial gain (–)/loss (+) 521 15,461 2012 2011 2010 2009 2008 Total 129,901 128,837 1,194 – 1,721 693 – 1,035 3,159

The amounts recognised in the income statement during the year Pension commitments within Alecta for de ned bene t pension schemes are as follows: Commitments regarding retirement pensions and family pensions for salaried employees in Sweden are secured through a policy with Alecta. According to a state- Group SEK thousand 2012 2011 ment issued by the Swedish Financial Reporting Board, UFR 3, this is a multiple- Expenses related to service during the financial year 1,228 558 employer defined benefit pension scheme. For the 2012 financial year, the Company Interest expense 4,574 4,247 had no access to any information that would enable it to recognise this scheme as a Actuarial losses reported for the year 1,432 825 defined benefit scheme. The ITP pension scheme (supplementary pensions for salaried employees), which is insured by Alecta, is thus recognised as a defined contri- Total expense for de ned bene t pension schemes 7,234 5,630 bution scheme. Charges for the year for pension insurance policies held with Alecta Expense for defined contribution schemes 58,221 51,690 totalled SEK 5 million (4). Alecta’s surplus can be allocated to policyholders and/or Expense for special employer’s contribution and tax on returns 6,888 6,289 insured parties. On 31 December 2012, Alecta’s surplus, in the form of the collective Total pension expense 72,343 63,609 funding ratio, amounted to 129 percent (113). The collective funding ratio is determined by the market value of Alecta’s assets as a percentage of the pension commitments calculated according to Alecta’s actuarial calculation assumptions, which do Expenses for de ned bene t pension schemes are allocated not comply with IAS 19. in the income statement as follows: Group SEK thousand 2012 2011 Amounts charged to operating pro t: Cost of goods sold 1,372 322 Selling expenses 432 191 Administrative expenses 856 870 Amounts charged to nancial expenses: Interest expenses 4,574 4,247 Total 7,234 5,630 Financial reports 65

Note 30 Receivables and liabilities, Group companies Note 32 Accrued expenses and deferred income Receivables from Group companies Group Parent Company Parent Company 2012 2011 2012 2011 On 1 January 2011 392 Salary liabilities 93 73 9 3 Change – 85 Social security contributions 38 32 4 3 On 1 January 2012 307 Deliveries of goods received, not invoiced 94 36 — — Change 135 Restructuring costs 0 1 — — On 31 December 2012 442 Energy costs 12 9 0 — Complaints 28 2 2 2 Liabilities to Group companies Maintenance 19 8 4 — Royalties 3 3 — — Parent Company Interest 1 — 0 — On 1 January 2011 17 Rents 6 1 — — Change — Other items 39 45 0 2 On 1 January 2012 17 Total 333 210 19 10 Change 0 On 31 December 2012 17

All items relate to internal loans, for which interest is calculated on an ongoing basis Note 33 Derivative instruments in line with the market. There are no contractual regulated terms. The item of change referring to receivables from Group companies includes impairments of SEK 21 million for 2012. Group 2012 2011 Assets Liabilities Assets Liabilities Currency forward contracts 3 1 0 1 Note 31 Other provisions Currency forward contracts Currency forward contracts entered into but unutilised are detailed in the table Miscellaneous Total Group below. The market value at the close of 2012 was SEK 2 million (–1). The market value of contracts identiﬁed as cash ﬂow hedges which meet the conditions for Amount on 1 January 4 4 hedge accounting was SEK 1 million (–1). This value has been recognised in other Provisions for the year 19 19 comprehensive income. The remaining market value, SEK 1 million (0), has been Amounts claimed 0 0 recognised in the income statement. The market value of the currency forward Amount on 31 December 23 23 contracts is set according to level 2. Level 1: In accordance with prices listed on an active market for the same instrument. Level 2: Based on directly or indirectly Provisions for the year include the addition of a reserve for restoring a rented property of observable market data which is not included in level 1. Level 3: Based on input SEK 9 million and a liability for an additional purchase price of SEK 8 million regarding ac- data which is not observable in the market. quisitions during the year. Currency Nom. value in Average rate Market Reported against Reported against Miscellaneous Total contract SEKm (SEK) value inc. statement other compr. income Parent Company EUR/SEK (net purch.) 13 8.81 0 0 0 Amount on 1 January 4 4 USD/SEK (net sales) – 35 6.88 2 1 1 Provisions for the year 1 1 Total – 22 2 1 1 Amounts claimed —— Amount on 31 December 5 5 Gains and losses in other comprehensive income in relation to currency forward contracts on 31 December 2012 will be transferred to the income statement at vari- The amount under Miscellaneous relates to future employer’s contribution for ous dates within one year of the balance sheet date. endowment insurance. Parent Company According to the Parent Company’s accounting principles, derivatives are not reported in the balance sheet. On 31 December 2012, the market value of unrealised derivatives was SEK 2 million (–1). 66 Financial reports

Note 34 Fair value of ﬁnancial assets and liabilities

Group 2012 2011 Financial assets Loans receivable and Der. used in hedge Non-financial Total Loans receivable and Der. used in hedge Non-financial Total accounts receivable accounting assets accounts receivable accounting assets Intangible assets — — 553 553 — — 434 434 Property, plant and equipment — — 735 735 — — 706 706 Other securities held as fixed assets — — 2 2 — — 2 2 Other long-term receivables — — 2 2 — — 1 1 Deferred tax assets — — 35 35 — — 40 40 Inventories — — 288 288 — — 236 236 Accounts receivable 682 — — 682 521 — — 521 Current tax assets — — 1 1 — — 4 4 Other receivables — — 48 48 — — 62 62 Derivative assets — 3 — 3 — 0 — 0 Prepaid expenses and accrued income — — 13 13 — — 14 14 Cash and bank 272 — — 272 124 — — 124 Total 954 3 1,677 2,634 645 0 1,499 2,144

Financial liabilities Der. used in hedge Other financial Non-financial Total Der. used in hedge Other financial Non-financial Total accounting liabilities liabilities accounting liabilities liabilities Provisions for pensions and similar obligations — — 95 95 — — 93 93 Deferred tax liabilities — — 114 114 — — 115 115 Other liabilities, interest-bearing — 1 — 1 — — — — Other provisions — — 23 23 — — 4 4 Accounts payable — 529 — 529 — 407 — 407 Loans — 254 — 254 — 114 — 114 Customer advances — 25 — 25 — 13 — 13 Current tax liabilities — — 19 19 — — 2 2 Other liabilities — — 35 35 — — 34 34 Derivative liabilities 1 — — 1 1 — — 1 Accrued expenses and deferred income — — 333 333 — — 210 210 Total 1 809 619 1,429 1 534 458 993

The fair value of value derivatives coincides with the carrying amount. The fair value has been calculated by discounting the difference between the contractual forward rate and the forward rate that can be subscribed to on the balance sheet date for the remainder of the term of the contract. The carrying amount of accounts receivable is deemed to coincide with the fair value because of the short maturity of these receivables.

Note 35 Untaxed reserves Note 37 Contingent liabilities

Parent Company 2012 2011 Group Parent Company Tax allocation reserves 2008 — 27 2012 2011 2012 2011 Tax allocation reserves 2009 45 45 Guarantees on behalf of subsidiaries —— 110 225 Tax allocation reserves 2010 21 21 Guarantee commitments, FPG/PRI 2 2 — — Tax allocation reserves 2011 32 32 Other contingent liabilities 0 0 — — Tax allocation reserves 2012 35 35 Total 2 2 110 225 Tax allocation reserves 2013 46 — Total 179 160 Note 38 Related parties Note 36 Pledged assets The Parent Company has controlling inﬂuence over the subsidiaries, in accordance with the structure described in Note 23. Group Parent Company When delivering goods and services between Group companies, business terms 2012 2011 2012 2011 and conditions and market pricing are applied. The scope of internal invoicing for joint Group services amounts to SEK 19 million (19), as detailed in Note 5, and relates Chattel mortgages ———— primarily to assigning costs for joint Group services and overheads. The Parent Com- Real estate mortgages ———— pany is an internal bank for the Group companies, whereby intra-Group interest in- Assets with retention of title 1 0 — — come of SEK 25 million (17) and interest expenses of SEK 1 million (3) have arisen in Total 1 0 —— the Parent Company to the extent reported in Notes 14 and 15 on page 55. Interest on loans receivable and liabilities is calculated on an ongoing basis in line with the market rate. There are no contractually regulated durations. Intra-Group receivables at the Parent Company amount to SEK 442 million (307) and liabilities to Group companies amount to SEK 17 million (17). During the year, the Parent Company received dividends from subsidiaries in the Financial reports 67

amount of SEK 51 million (153), of which SEK 35 million (0) refers to anticipated divi- Acquisition cost, goodwill and cash ow effects (preliminary) dend and recovered intra-Group accounts receivable of SEK 0 million (0). The Group’s transactions with senior executives in the form of salaries and other Acquisition cost remuneration, benefits, pensions and severance pay agreements with the Board and the President and CEO are detailed in Note 11 on pages 53 – 54. Consideration transferred 199 From time to time, the Board member Erik Paulsson represents other compa- Conditional purchase price 8 nies which are Nolato suppliers or customers. Both in relation to the situation of this Less fair value of net assets acquired (as detailed below) – 106 Board member and to that of each supplier/customer, Nolato’s Board has determined that the transactions carried out with these companies do not constitute significant Goodwill 101 business connections when considering the size of revenues generated in comparison with annual supplier/customer sales. Otherwise, there are no known transac- Goodwill arising in connection with the transaction consists of synergies that are ex- tions with related parties. pected to be achieved primarily as a result of increased sales volumes for the Nolato The Parent Company has issued guarantees on behalf of Group companies worth Group to customers in the UK from other companies in the Nolato Group. But also SEK 110 million (225). partly by means of lower costs through better purchasing terms from external suppliers, and other involvement at different levels in the Nolato Medical business area. The goodwill is not tax-deductible according to UK tax rules. Following the original acquisition analysis, the purchase price has been adjusted by SEK 2 million, which Note 39 Cash flow affects the size of the goodwill item by SEK –2 million.

Group Parent Company Balance sheet on Adj. to Fair Net assets Reconciliation of cash and cash equivalents 2012 2011 2012 2011 acquisition date fair value value The following subcomp. are included in c.a.c.e.: Intangible fixed assets — 41 41 Cash and bank balances 230 85 0 0 Property, plant and equipment 33 — 33 Credit balance on Group account in Parent Company 42 39 42 39 Deferred tax assets 2 — 2 Total c.a.c.e. rep. in the cash ow statement 272 124 42 39 Current assets 70 2 72 Cash and cash equivalents 23 — 23 Unutilised credit Provisions – 10 — – 10 On the balance sheet date, unutilised credit within the Group stood Deferred tax liabilities – 1 – 10 – 11 at SEK 546 million (587). Current liabilities – 44 — – 44 Net assets acquired 73 33 106

Note 40 Acquisition Intangible ﬁxed assets in the form of customer relationships have been estimated at SEK 41 million and will, for accounting purposes, be amortised over six years. The The acquisition of Cope Allman Jaycare Ltd gross value, fair value and value expected to be settled for the balance sheet item accounts receivable amount to SEK 44 million in all cases. Acquisition costs of SEK 6 Description of the company million have been expensed as other operating expenses. Nolato has acquired the company Cope Allman Jaycare as part of the Group’s strategic focus on the medical technology and pharmaceuticals area. It is a British ﬁrm Cash flow effects working in pharmaceutical packaging, and provides Nolato Medical with a strengthened customer base and geographic expansion. The company has 270 employees Cash paid acquisition value 199 at its facilities in Portsmouth and Newcastle in the UK. The company is part of the Less acquired cash and cash equivalents – 23 Nolato Medical business area. Following the acquisition, the company changed its Net cash flow from the acquisition 176 name to Nolato Jaycare.

Description of the acquisition Nolato acquired 100 percent of the shares in Cope Allman Jaycare, and obtained controlling inﬂuence. The company was acquired on 10 April and was consolidated by Nolato as of 1 April. An additional purchase price may be payable based on the earnings trend from the takeover until the end of Q1 2014. Earnings exceeding current levels are paid at around the same multiple as the initial purchase price. In the acquisition analysis, Nolato estimated that an additional purchase price of a further SEK 8 million will be payable. The acquisition was reported using the acquisition method, with the total purchase price being allocated among the assets acquired and liabilities assumed based on their fair values. Fair value was determined using generally accepted principles and methods. The purchase price comprises a cash payment for the initial purchase price, and a conditional purchase price. The acquisition contributed SEK 201 million to the Nolato Group’s income in 2012, and had a marginal positive effect on the Group’s earnings per share. Had the acquisition taken place on 1 January 2012, it would have contributed SEK 272 million to the Nolato Group’s income and SEK 13 million to net proﬁt, and would have had made a marginal positive contribution to the Group’s earnings per share. The acquisition analysis of the company is, in its entirety, still preliminary and may be changed according to IFRS regulations. 68 Financial reports

Attestation and signatures of the Board

This Annual Report has been prepared in accordance with IFRS international As indicated below, the Annual Report was approved for issue by the Board on accounting standards as adopted by the EU. It provides a true and fair presentation 4 March 2013. The consolidated income statement and balance sheet and the Parent of the operations, ﬁnancial position and earnings of the Group and the Parent Com- Company’s income statement and balance sheet will be proposed for adoption at the pany, and describes the signiﬁcant risks and uncertainty factors faced by the Parent Annual General Meeting on 25 April 2013. Company and the companies included in the Group.

Torekov, 4 March 2013

Fredrik Arp Chairman of the Board

Gun Boström Henrik Jorlén Anna Malm Bernsten Board member Board member Board member

Erik Paulsson Lars-Åke Rydh Hans Porat Board member Board member President & CEO

Magnus Bergqvist Björn Jacobsson Eva Norrman Employee representative Employee representative Employee representative

My auditor's report was submitted on 8 March 2013.

Alf Svensson Authorised public accountant Auditor’s report 69

Auditor’s report

To the annual meeting of the shareholders of Nolato AB, corp. id. 556080-4592

Report on the annual accounts and consolidated accounts Report on other legal and regulatory requirements I have audited the annual accounts and consolidated accounts of Nolato AB for the In addition to my audit of the annual accounts and consolidated accounts, I have also year 2012. The annual accounts and consolidated accounts of the company are in- audited the proposed appropriations of the company’s profit or loss and the adminis- cluded in the printed version of this document on pages 30 – 68. tration of the Board of Directors and the Managing Director of Nolato AB for the year 2012. Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the prepara- The Board of Directors is responsible for the proposal for appropriations of the tion and fair presentation of these annual accounts in accordance with the Annual company’s profit or loss, and the Board of Directors and the Managing Director are Accounts Act and of the consolidated accounts in accordance with International Fi- responsible for administration under the Companies Act. nancial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director deter- Auditor's responsibility mine is necessary to enable the preparation of annual accounts and consolidated ac- My responsibility is to express an opinion with reasonable assurance on the propo- counts that are free from material misstatement, whether due to fraud or error. sed appropriations of the company’s profit or loss and on the administration based on my audit. I conducted the audit in accordance with generally accepted auditing Auditor's responsibility standards in Sweden. My responsibility is to express an opinion on these annual accounts and consolidated As basis for my opinion on the Board of Directors’ proposed appropriations of the accounts based on my audit. I conducted my audit in accordance with International company’s profit or loss, I examined the Board of Directors' reasoned statement and Standards on Auditing and generally accepted auditing standards in Sweden. Those a selection of supporting evidence in order to be able to assess whether the proposal standards require that I comply with ethical requirements and plan and perform the is in accordance with the Companies Act. audit to obtain reasonable assurance about whether the annual accounts and conso- As basis for my opinion concerning discharge from liability, in addition to my audit lidated accounts are free from material misstatement. of the annual accounts and consolidated accounts, I examined significant decisions, An audit involves performing procedures to obtain audit evidence about the actions taken and circumstances of the company in order to determine whether any amounts and disclosures in the annual accounts and consolidated accounts. The member of the Board of Directors or the Managing Director is liable to the company. procedures selected depend on the auditor’s judgment, including the assessment I also examined whether any member of the Board of Directors or the Managing Di- of the risks of material misstatement of the annual accounts and consolidated ac- rector has, in any other way, acted in contravention of the Companies Act, the Annual counts, whether due to fraud or error. In making those risk assessments, the auditor Accounts Act or the Articles of Association. considers internal control relevant to the company’s preparation and fair presenta- I believe that the audit evidence I have obtained as above is sufficient and appro- tion of the annual accounts and consolidated accounts in order to design audit pro- priate to provide a basis for my opinions. cedures that are appropriate in the circumstances, but not for the purpose of expres- sing an opinion on the effectiveness of the company’s internal control. An audit also Opinions includes evaluating the appropriateness of accounting policies used and the reaso- I recommend to the annual meeting of shareholders that the profit be appropriated nableness of accounting estimates made by the Board of Directors and the Managing in accordance with the proposal in the statutory administration report and that the Director, as well as evaluating the overall presentation of the annual accounts and members of the Board of Directors and the Managing Director be discharged from consolidated accounts. liability for the financial year. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions.

Opinions In my opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2012 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2012 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. I therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group.

Malmö, 8 March 2013

Alf Svensson Authorised public accountant 70 Nolato’s shares and shareholders

Nolato’s shares and shareholders

Listing

■ Share price performance 2012 Nolato AB was listed on the Stockholm SEK Stock Exchange in , and its B shares are 90 Acquisition of 6 month now listed on the NASDAQ OMX Nordic British company 3 month interim rep. Exchange in the Stockholm Mid Cap segment 80 interim rep. and the Industrials sector. Shares are also traded on the Burgundy 70 stock exchange. 9 month interim rep. 60 Share price performance Nolato’s B shares rose over the course of the 50 year by % (–), outperforming the Stock- Year-end Nolato B OMX Mid Cap report holm Stock Exchange (OMXS) average by 40 percentage points. These shares were listed at Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec the end of at . (.). ■ Share price performance 2008 – 2012 The highest closing price on the NASDAQ SEK OMX Nordic Exchange during was 100 . ( – November and December), and the lowest closing price was . ( 90 January). The highest price paid during the 80 year was . ( November), with a 70 lowest price of . ( January).

60 The market value of these shares as at December was , million (,). 50 In , . million (.) Nolato shares 40 were traded on the NASDAQ OMX Nordic 30 Exchange, and . million (.) on Burgundy.

20 The turnover rate, i.e. the degree of liquidity, Nolato B OMX Mid Cap was % (). 10

0 Share capital 2008 2009 2010 2011 2012 The share capital of Nolato AB totals ■ Per share data million, divided into ,, shares. Of these, ,, are A shares and 2012 2011 2010 2009 2008 Net earnings per share, SEK 1 7.68 5.02 7.11 4.68 6.77 ,, are B shares. Each A share entitles Shareholders’ equity per share, SEK 2 46 44 45 41 40 the holder to ten votes, while a B share entitles Cash flow per share, SEK, excl.acquisitions and disposals 12.05 4.26 8.74 5.28 11.71 the holder to one vote. All shares have equal Share price at 31 December, SEK 78.50 50.75 83.00 59.00 32.00 rights to the assets and earnings of the com- Price/earnings ratio, times 3 10 10 12 13 5 pany. Turnover rate, % 19 34 47 34 25 Dividend (2012 proposal), SEK 6.00 5.00 6.00 3.00 2.75 Incentive programmes Yield (2012 proposal), % 4 7.6 9.9 7.2 5.1 8.6 Nolato does not have any current financial Dividend as percentage of earnings per share (2012 prop.) 78 100 84 64 41 instrument programmes which involve any Average number of shares, thousand 26,307 26,307 26,307 26,307 26,307 dilution in the number of shares. Price/equity ratio per share, times 1.7 1.2 1.8 1.4 0.8 Market capitalisation 31 December, SEK million 2,065 1,335 2,183 1,552 842 Transferability De nitions There are no restrictions on the transferability 1 Profit after tax divided by the average number of shares. 2 Shareholders’ equity divided by the number of shares. of the shares as a result of legal provisions or 3 Quoted share price on 31 December divided by net earnings per share. the company’s Articles of Association. 4 Dividend for the year divided by the market price quoted on 31 December. Nolato’s shares and shareholders 71

Dividend policy The Board’s dividend proposal shall take into ■ Dividend 2008 – 2012 ■ Dividend yield 2008 – 2012 consideration Nolato’s long-term develop- SEK % 8 10 ment potential, financial position and invest- 8 ment needs. 6 6 The Board’s dividend policy means that the 4 Board intends to propose a dividend each year 4 2 which corresponds on average to at least 2 0 0 percent of profit after tax. 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 The Board of Directors proposes an ordinary dividend for of . (.) per share, together with an extra dividend of ■ Breakdown of shareholders at 31 Dec 2012 . (.), totalling . per share (.), Geographic region Categories Natural persons / legal entities corresponding to million (). The pay-out ratio for the ordinary dividend, i.e. Other countries Sweden Financial Legal the dividend in relation to net income, is %, Other Europe companies entities and % in total. The dividend yield is . % in relation to the share price quoted on December . Over the last five years, the average yield from

Nolato’s shares has been .%. Swedish natural persons Other Swedish legal entities Active information disclosure Shareholders Natural persons Nolato’s management works continuously to outside Sweden develop and improve ﬁnancial information, in order to provide the market with good condi- ■ The ten largest shareholders at 31 Dec 2012 tions for determining the value of the Com- Number of Number of % of % of Shareholder pany as fairly as possible. This includes par- A shares B shares capital votes ticipating actively when dealing with analysts, Paulsson family 819,200 2,372,575 12.13 20.66 shareholders and the media. Lannebo fonder 0 2,807,712 10.67 5.49 Jorlén family 1,104,700 1,535,317 10.04 24.60 Analysts Boström family 835,500 1,653,670 9.46 19.57 Svolder 0 1,495,000 5.68 2.92 Over the course of the year, Nolato’s shares Skandia fonder 0 1,134,482 4.31 2.22 were monitored and analysed by analysts DnB - Carlson fonder 0 709,775 2.70 1.39 including the following: Odin fonder 0 679,636 2.58 1.33 Handelsbanken Fonder 0 638,325 2.43 1.25 ■ ABG Sundal Collier – Per Lindberg Avanza Pension 0 387,137 1.47 0.76 + Total for ten largest shareholders 2,759,400 13,413,629 61.47 80.19 ■ Carnegie – Mikael Laséen Other shareholders (7,435) 0 10,134,379 38.53 19.81 + Total 2,759,400 23,548,008 100.00 100.00 ■ Redeye – Greger Johansson + ■ Breakdown of shareholdings by size at 31 Dec 2012

Number of Number of Number of % of % of Current share and owner information Holding shareholders A shares B shares capital votes Current information about Nolato’s shares 1 – 499 4,823 0 775,750 2.95 1.52 and largest shareholders can be found on our 500 – 999 935 0 585,137 2.22 1.14 website, www.nolato.com. 1,000 – 2,499 1,109 0 1,491,675 5.67 2.92 On the website you will also ﬁnd all interim 2,500 – 4,999 260 0 852,401 3.24 1.67 reports, annual reports and press releases 5,000 – 7,499 112 0 642,878 2.44 1.26 since . 7,500 – 9,999 33 0 281,783 1.07 0.55 10,000 – 19,999 59 0 716,339 2.72 1.40 20 000 – 49,999 54 0 1,624,555 6.18 3.18 50,000 – 99,999 22 28,000 1,555,672 6.02 3.59 100,000 – 249,999 16 210,000 2,313,912 9.59 8.63 250,000 – 22 2,521,400 12,707,906 57.90 74.14 Total 7,445 2,759,400 23,548,008 100.00 100.00 72 Corporate governance report

Corporate governance report

Corporate governance Ownership All Board members, the Company’s manage- Nolato is a Swedish limited company. Its cor- Nolato’s B shares are listed on the NASDAQ ment and the auditors are normally present to porate governance is based on Swedish legis- OMX Nordic Exchange in the Stockholm answer any such questions. lation, primarily the Swedish Companies Act, Mid Cap segment, where the shares are the regulations set out by NASDAQ OMX included in the Industrials sector. The 2012 Annual General Meeting Nordic, the Swedish Code of Corporate Gov- The Company’s A shares entitle the holder The Annual General Meeting was held ernance and the rules and recommendations to ten votes, and the B share to one vote. All on April in Grevie. sharehold- issued by relevant organisations. shares have the same rights to the assets and ers attended the Annual General Meeting, earnings of the Company. together representing . percent of the The Company’s application of the Code At the end of , Nolato had , share- shares and . percent of the votes. The Swedish Code of Corporate Governance holders. Only one individual shareholder, Fredrik Arp, Gun Boström, Henrik Jorlén, is based on the principle comply or explain. Backahill AB, with . percent of the votes, Anna Malm Bernsten, Erik Paulsson, Hans This means that companies which apply the has a holding that represents at least one Porat and Lars-Åke Rydh were re-elected as Code may deviate from specific rules, but tenth of the number of votes for all shares in Board members. must then provide explanations and reasons the Company. Amongst other matters, the Annual Gen- for each individual deviation. For further information about ownership, eral Meeting resolved on fees for the Board of Nolato deviates from points . and . of see the previous page. Directors, remuneration guidelines for senior the Code. executives and principles for appointing the Point . states that the majority of the Annual General Meeting Nomination Committee. Nomination Committee should consist of Shareholders entered in the register of share- The Annual General Meeting also resolved non-Board members, that no more than one holders on the dividend record date and reg- to adopt the income statement and balance of these Board members may be dependent istered within the timeframe stipulated by the sheet for Nolato AB and the consolidated in relation to the Company’s major share- notice of the Meeting are entitled to attend income statement and balance sheet, and holders, and that the Chairman of the Nomi- the Annual General Meeting, either in person on the appropriation of profits. The Annual nation Committee should not be the Chair- or via a representative. General Meeting discharged the members of man of the Board or another Board member. Resolutions at Annual General Meetings the Board and the President and CEO from Nolato’s largest shareholders are of the opin- are normally passed by simple majority. On liability for the financial year. ion that the Company’s ownership structure, certain issues, as prescribed in the Swedish with three families which hold around per- Companies Act, a specific minimum percent- Nomination Committee cent of the votes, is best represented within age of the shareholders present is required The Annual General Meeting resolved the Nomination Committee by these share- in order for the Annual General Meeting to that the Nomination Committee ahead of the holders together with other major sharehold- achieve a quorum or a statutory voting major- Annual General Meeting shall consist of ers. Since the representatives of these fami- ity. one representative for each of the five largest lies have such a large shareholding, they have The Annual General Meeting must be held shareholders in terms of votes as at the end of deemed it to be both natural and necessary within six months of the end of the financial September . that they should also be involved and exercise year. At the Annual General Meeting, matters In accordance with this decision, the Nomi- their shareholders’ interests through repre- relating to subjects such as dividends, adopt- nation Committee ahead of the Annual sentation on both the Company’s Nomina- ing the income statement and balance sheet, General Meeting consists of Henrik Jorlén, tion Committee and the Board. discharging the members of the Board and chairman, Erik Paulsson, Gun Boström, Johan Point . states that the Audit Committee the President and CEO from liability, elect- Lannebo (Lannebo Fonder) and Ulf Hedlundh should consist of at least three Board mem- ing the Board members, the Chairman of (Svolder AB). bers. The Board has decided that, in view of the Board and, where appropriate, auditors, Since its inauguration and up until February the composition and size of Nolato’s Board, determining the fees payable to the Board and , the Nomination Committee held three the Audit Committee would be best represent- the auditors and agreeing on guidelines for meetings. ed by two members. the remuneration of senior executives and The Nomination Committee can be contact- the principles for appointing the Nomination ed by e-mailing: [email protected] or Committee are dealt with. by writing to: The Nolato Nomination Com- Shareholders also have the opportunity mittee, c/o Henrik Jorlén, Kommendörsgatan to ask questions about the Company and its , Torekov, Sweden. development at the Annual General Meeting. Corporate governance report 73

Schematic description of the Nolato Group’s corporate governance

The shareholders’ right to make decisions on matters relating to Nolato is exercised at An- The Auditor is elected by the shareholders at the The Nomination Committee is responsible nual General Meetings and, where appropriate, Annual General Meeting to audit the Compa- for submitting proposals to the Annual Gen- at Extraordinary General Meetings. The Annual ny’s annual report and accounts, and the Board’s eral Meeting on the Chairman of the Board, General Meeting usually takes place at the end and President and CEO’s management of Nolato. Board members (number, individuals, chair- of April. The Annual General Meeting resolves Auditing takes place in accordance with the Swed- man), directors’ fees, remuneration for com- on issues stipulated by the Swedish Compa- ish Companies Act and the Standards on Auditing mittee work, how the Nomination Commit- nies Act and the Company Code. By registering in Sweden. The auditor also reviews the remunera- tee should be appointed for the coming year a matter in writing with the Board within cer- tion of senior executives and the corporate govern- and submitting proposals regarding auditors tain timeframes, shareholders have the right to ance report. and auditors’ fees. have a matter addressed by the Annual General Reporting occurs to the Board and the Audit Meeting that is relevant thereto. Committee. At the Annual General Meeting, the auditor provides information about the auditing work and observations made in an auditors’ report. The auditor is presented on page 79.

Shareholders Election Nomination Proposals Information Committee Auditor

The Audit Committee’s task is to supervise the procedures for Election accounting, financial reporting and internal auditing. The Audit Reports The Board shall consist of at least five and at committee shall have frequent Committee most nine members, and a maximum of three deputies elected by the Annual General Meet- contact with the Group’s au- Board of Directors ditors in order to discuss au- ing. In addition, it includes three members dit matters, evaluate auditing Remuneration elected by employees. The President and CEO Committee work and establish guidelines of Nolato is the person reporting at Board Goals meetings, and Nolato’s CFO is secretary. for services other than auditing Strategies that Nolato may procure from Reporting The Board decides on the ultimate direc- its auditors. Basic Proposals tion of Nolato’s operations and prepares the Principles Documenta- necessary instructions. It determines the Policies tion for Group’s management structure and appoints, CEO decision- dismisses and oversees the President and The Remuneration Committee instructions making CEO. The Board members are presented on is responsible for proposing to page 79. the Board all remuneration and benefits for the President and President and CEO The Group management is appointed by CEO and principles for variable the President and CEO in consultation with remuneration for senior execu- Chairman of the Board and, besides the Professional, financial and ethical President and CEO, consists of the CFO and tives. The committee shall also governance and control approve all remuneration for the business area presidents. Nolato’s Group the executive management. management holds monthly reviews of the operations under the management of the Group Management President and CEO. The President and CEO manages operations in accordance with the Swedish Companies Act and Each operational Group company is included within the framework established by the Board in one of the Group’s three market-focused of Directors. In consultation with the Chairman business areas. The business area coordi- of the Board, the President and CEO draws up Nolato Medical Nolato Telecom Nolato Industrial nates the operations and is managed by a the necessary information and documentation business area president, who is in constant for the Board’s decision-making, presents items contact with the managing directors and and justifies proposals. The President and CEO is management functions of the companies responsible for Nolato’s commercial and finan- Op. comp. Op. comp. Op. comp. within the business area in question. cial performance, and manages and coordinates Each Group company is managed by day-to-day operations in accordance with the a board of directors, which approves and guidelines and decisions of the Board. makes decisions on the company’s long-term strategies and overall structural and organi- Reporting and control occurs by means of the Board and the Audit Committee sational changes. Each Group company has analysing and assessing risks and control environments, and overseeing the a managing director who is responsible for quality of financial reporting and Nolato’s internal control systems. This takes operations, as specified in the managing di- place through, for example, issuing instructions to the President and CEO and rector’s instructions issued by the board of agreeing on requirements for the content of the reports on financial condi- directors. The managing director is assisted tions given to the Board on an ongoing basis. The Board is informed of – and by a management team, with members from ensures – financial reports such as monthly reports, forecasts, interim reports important company functions. and the Annual Report. 74 Corporate governance report

Auditors wise receiving the training required in order At the Annual General Meeting, author- The Board and its work for the Board to be able to carry out its work ised public accountant Alf Svensson was The working methods of the Board in an e ective manner. In addition, the Chair- elected as auditor of Nolato and authorised The Board decides on the ultimate strategic man of the Board ensures that the work of public accountant Camilla Alm Andersson direction of Nolato’s operations and prepares the Board is evaluated on an annual basis, and was elected as deputy auditor, both for the the necessary instructions. It determines the that the Nomination Committee is informed period until the next Annual General Meet- Nolato Group’s management structure and of the outcome of this evaluation. ing. appoints, dismisses and oversees the President Both work for the accountancy company and CEO. Board composition in 2012 KPMG AB. Principles were decided on at the Board’s Following the Annual General Meeting, The auditor works according to an audit constituent meeting following the Annual the Board consists of seven members elected plan. Reports have been submitted to the General Meeting concerning the Board’s rules at the Annual General Meeting: Fredrik Arp Board, both during the course of the audit of procedure for its work, the delegation of (Chairman of the Board), Gun Boström, Hen- and when adopting the year-end report for duties between the Board and the President rik Jorlén, Anna Malm Bernsten, Erik Pauls- on February . The auditor also and CEO, and financial reporting. son, Hans Porat and Lars-Åke Rydh. participated in the Annual General Meeting, The key elements of these principles deter- The Board also includes three employee and described the audit work and observa- mine the following: representatives: Magnus Bergqvist, Björn tions made in an auditors’ report. – The Board shall establish a work plan Jacobsson and Eva Norrman. These each Over the course of the year, the auditor with five regular meetings over the course of have a deputy: Ingegerd Andersson, Bo Elias- carried out a number of consultancy com- the year, at which various matters as stipu- son and Håkan Svensson. missions over and above the audit, relating lated by the rules of procedure shall be con- Apart from the CEO and the union rep- primarily to accounting and taxation issues sidered. resentatives, none of the Board members is and consultations in connection with acqui- – Notice of the meeting, the agenda and the employed by or works within the Company’s sitions. relevant documentation for the Board meet- operations. The external audit is conducted in according shall normally be sent out no later than one The Board members Anna Malm Bern- ance with generally accepted auditing prac- week before the meeting. Numbered minutes sten, Lars-Åke Rydh and the Chairman of the tices. Annual reports for legal entities out- shall be kept for every meeting. Board Fredrik Arp are deemed by the Board side Sweden must be audited in accordance – The delegation of duties clarifies the to be independent of the Company’s major with statutory requirements and other appli- responsibilities of the Board and the key shareholders. cable rules in the country in question, and in duties of the Chairman and the President and From time to time, Erik Paulsson represents accordance with generally accepted auditing CEO. The instructions for the President and other companies which are Nolato suppliers practices. Nolato’s auditor regularly study CEO include limitations on decisions in rela- or customers. Both in relation to the situa- the approved minutes from Nolato’s Board tion to investments, acquisitions, transfers tion of this Board member and to that of each meetings, and also has ongoing access to the and certain agreements. supplier/customer, Nolato’s Board has deter- monthly reports which the Board receives. – In order to enable the Board to follow and mined that the transactions carried out with The auditor has audited the remuneration monitor the Group’s financial position and these companies do not constitute significant of senior management and reviewed the com- development on an ongoing basis, the Presi- business connections when considering the pany's half-year report. dent and CEO shall provide the Board with size of revenues generated in comparison with Nolato’s auditor and the deputy auditor monthly reports on sales, profit, capital com- annual supplier/customer sales. are presented on page . mitment, cash flow, the balance sheet, forecast Nolato’s Board has therefore determined monitoring and forecast updates. that all members elected by the Annual Gen- The Chairman of the Board, Fredrik Arp, eral Meeting, apart from the President and organises and leads the work of the Board so CEO, are independent in relation to the Com- that this is carried out in accordance with the pany. Swedish Companies Act, other legislation and Further information about the members of regulations, applicable rules for listed com- Nolato’s Board is provided on page . panies (including the Swedish Code of Cor- porate Governance) and the Board’s inter- The Board’s work in 2012 nal governance instruments. The Chairman During , the Board held five meetings and of the Board monitors operations through a constituent meeting after the Annual Gener- ongoing contact with the President and CEO, al Meeting. Reviews of the Company’s oper- and is responsible for other Board members ations, markets and finances were standing receiving su cient information and docu- items on the Board’s agenda. mentation for making decisions. In addition to these points, the work of the The Chairman of the Board is responsible Board during the year has focused primarily for the Board being kept updated, improv- on investment discussions, market communi- ing its knowledge about Nolato and other- cation, acquisition processes, budgets/fore- Corporate governance report 75 casts, financing and strategy discussions relat- Board meeting attendance in 2012 Other information ing to the Company’s operations during the During , the Board members elected by most recent three-year period. the Annual General Meeting attended the fol- All decisions have been unanimous. lowing Board meetings: Group management The Group management consists of Hans The Audit Committee Feb Apr Jul Oct Dec Porat (CEO of the Nolato Group), Per-Ola The members of the committee are Lars-Åke Fredrik Arp x x x x x Holmström (CFO), Christer Wahlquist (Pres- Rydh (chairman) and Henrik Jorlén, who Gun Boström x x x x x ident of Nolato Medical), Jörgen Karlsson were appointed by the Board. The work of Henrik Jorlén x x x x x (President of Nolato Telecom) and Johan the committee is regulated by specific rules of Anna Malm Bernsten x x x – x Arvidsson (President of Nolato Industrial). procedure, which have been adopted by the Erik Paulsson – x x x x Further information about members of Board. Lars-Åke Rydh x x x x x Group management can be found on page . The Audit Committee held five meetings in Hans Porat x x x x x . Both members attended all meetings. Business operations Minutes were taken at all meetings. Board remuneration All business operations within the Group are For the period starting with the Annual conducted by subsidiaries, in keeping with The Remuneration Committee General Meeting and ending with the the decentralised culture that has always char- The members of the committee are Fredrik Annual General Meeting, Board remunera- acterised Nolato. The operational subsidiar- Arp (chairman) and Henrik Jorlén, who were tion totalled ,, excluding travel ies are organised into three customer-focused appointed by the Board. The committee held allowances ( ,,), divided up as fol- business areas. Information about their two meetings in . lows: organisation and operations is provided on Ahead of , the committee drew prin- pages – . ciples for variable remuneration and other The Board: remuneration and benefits for the President Chairman: SEK 270,000 Remuneration information and CEO and senior executives, which the Board member: SEK 140,000 Information on fees, salaries, pensions and Board will propose to the Annual General other benefits for the Board of Directors, the Meeting for resolution. The Audit Committee: President and CEO and other senior execu- Chairman: SEK 50,000 tives can be found in Note on pages – . Reporting and control Member: SEK 30,000 The Board and the Audit Committee analyse Information for shareholders, etc. and assess risks and control environments, The Remuneration Committee: Nolato reports to NASDAQ OMX Nordic, and oversee the quality of financial report- Chairman: SEK 50,000 where the Company is quoted in the Stock- ing and Nolato’s internal control systems. holm Mid Cap segment. Information is pro- This takes place through, for example, issu- Directors’ fees are paid only to external mem- vided in the form of quarterly reports and ing instructions to the President and CEO, bers. Employees of the Company do not press releases in accordance with the require- agreeing on requirements for the content of receive directors’ fees. ments of the stock exchange and the infor- the reports on financial conditions given to During , the current members of the mation policy adopted by Nolato’s Board of the Board on an ongoing basis, and holding Board received the following remuneration, Directors. reviews together with the management and which was paid in December : Reports, press releases, the annual report the auditors. and other information is available on Nola- The Board is informed of – and ensures the Fredrik Arp SEK 320,000 to’s website, www.nolato.com, under Inves- quality of – financial reports such as month- Gun Boström SEK 140,000 tor Relations. ly reports, forecasts, interim reports and the Henrik Jorlén SEK 170,000 The website provides up-to-date informa- Annual Report, but has delegated the Com- Anna Malm Bernsten SEK 140,000 tion about Nolato’s corporate governance, pany management with the task of ensuring Erik Paulsson SEK 140,000 for instance the current shareholdings of the the quality of presentation materials in con- Lars-Åke Rydh SEK 190,000 Board, current Articles of Association and nection with meetings held with the media, Total SEK 1,100,000 information about the Annual General Meet- shareholders and financial institutions. ing and the largest shareholders. The Board is also informed of minutes drawn up by the Audit Committee and any observations, recommendations and proposed decisions and actions. 76 Corporate governance report

The Board’s description of the internal audit ■ Policy documents in relation to financial reporting The following overall policy documents for the Group have been established by the Board of Directors: In accordance with the Swedish Companies organisation, decision-making paths, author- Nolato’s Basic Principles Act and the Swedish Code of Corporate Gov- isation and responsibilities communicated, These define the common values platform ernance, the Board is responsible for the as well as the culture which the Board and the for all Group operations. Company’s internal audit. The description Company management communicates and does not constitute part of the formal Annu- works within. Code of Conduct al Report documents. In the description, the This sets out the ethical and compassion- Board does not issue any statement on the Policy documents ate principles that Nolato employees are obliged to follow. e ectiveness of the internal audit. Nolato’s group-wide regulations are defined Nolato’s internal audit in relation to finan- in nine policy documents, as detailed in Environmental Policy cial reporting includes five main activities: the box to the left. These documents are an This governs the Group’s environmental creating a control environment, risk assess- important part of creating an e ective control activities. ment, control activities, information and environment within Nolato. communication, and monitoring. The documents relating to the group’s core Financial Policy This governs how financial risks should be values are based on the combination of ethi- dealt with within the Group. Control environment cal and professional values that Nolato has E ective Board work forms the foundation upheld for many years, and that are commu- IT Policy for good internal auditing. The Board has nicated to all employees, including in the form This governs the Group’s IT security struc- established clear processes and rules of proof a publication entitled “The Nolato Spirit”. ture. cedure for its work. One key element of the In addition to these policy documents,

Board’s work is deciding on and approving a rules of procedure for the Board, and Presi- Information Policy This governs the dissemination of informa- number of fundamental policies, guidelines dent and CEO instructions have been drawn tion by the Group, including in relation to and frameworks for financial reporting. These up. These describe matters such as the dis- listing requirements. include the Group’s Code of Conduct, the tribution of work within the Board and the information policy and the financial policy. duties of the Chairman of the Board and the Insider Policy The Board evaluates the operating activi- President and CEO. This governs the application of reporting ties’ performance and results on an ongoing Rules of procedure have also been drawn duties and the prohibition of short-term basis, via a reporting package which includes up for the managing director of each subsidi- trading in accordance with the Swedish Insider Trading Act. operating profit, rolling forecasts, the analysis ary. of key figures and other significant operating Managers at various levels within the Com- Quality Policy and financial information. pany are responsible for dealing with internal This outlines the underlying focus of the Nolato has a simple legal and operational auditing on an ongoing basis within their own Group’s quality work. structure, with established management and particular areas of responsibility. internal audit systems. This enables the busi- Whistleblowing Policy This governs the Group’s procedures where- ness to react swiftly in the event of changed Risk assessment by employees can report serious miscon- conditions in the Group’s market or in oth- The Company carries out a risk analysis of duct. er areas. Operational decisions are taken at its financial reporting, which is evaluated and company or business area level, while deci- adopted by the Board. In connection with sions on overall strategy, focus, acquisitions, this risk analysis, income statement and bal- major investments and overall financial issues ance sheet items are identified where there is a are taken by Nolato’s Board and Group man- heightened inherent risk of serious errors. agement. Within the company’s operations, these Internal auditing in relation to Nolato’s risks are mainly present in fixed assets, finan- financial reporting is tailored to work within cial instruments, inventories, customer receiv- this organisation. Within the Group, there is ables, accrued expenses, taxes and revenue a clear regulatory framework for delegating recognition. responsibility and authorisation, and this fol- These risk assessments are based on e ects lows the Group structure. The basis for inter- on financial reporting, the outcome of the nal auditing in relation to financial report- income statement, business processes, exter- ing is a control environment consisting of the nal factors and the risk of fraud. Corporate governance report 77

Control activities Monitoring Auditor’s statement on the Those risks which have been identified in rela- The President and CEO is responsible for tion to financial reporting are dealt with via internal auditing being organised and moni- corporate governance report the Company’s control activities, e.g. authen- tored in accordance with the guidelines estab- tication checks for IT systems and authorisa- lished by the Board. Financial control is car- tion controls. ried out by the Group financial function. To the Annual General Meeting of Nolato AB, Swe- These operational-specific controls are Financial reporting is analysed in detail each dish corporate identity number 556080-4592 supplemented by detailed financial analyses month. of earnings, followed-up with business plans The Board has monitored the financial It is the Board of Directors who are responsible for the and forecasts, which provide an overall assess- reporting at its meetings, and the Compa- corporate governance report for 2012 on pages 72 – 77 ment of the quality of the reporting. ny’s auditors have reported back their obser- and for this being prepared in accordance with the vations to the Board and the Audit Com- Swedish Annual Accounts Act. Information and communication mittee. The Audit Committee has received I have read the corporate governance report and, ba- The Company’s steering documents for finan- reports from the auditor on an ongoing basis, sed on this reading and my knowledge about the Com- cial reporting consist mainly of policies and and monitors measures taken to improve pany and the Group, I believe that I have a sufficient ba- guidelines, which are kept up-to-date and or amend controls. The Board has received sis for my opinion. This means that my statutory review communicated via the relevant channels. financial reports on a monthly basis, and of the corporate governance report is different in focus Information is obtained from the subsidiar- the Company’s financial situation has been and considerably smaller in scope than the focus and ies through financial and operational reports addressed at each Board meeting. scope of an audit conducted in accordance with the In- to the boards of the subsidiaries, the business The Board and the Audit Committee have ternational Standards on Auditing and generally accep- area management and the Group manage- reviewed all interim reports and the Annual ted auditing practices in Sweden. ment. Report prior to publication. I am of the opinion that a corporate governance re- There is a clear information policy for port has been prepared, and that its statutory informa- communication with external parties, which Internal audit tion complies with the Annual Report and consolidated provides guidelines for the forms which this Nolato has a simple legal and operational accounts. communication should take. The aim of the structure, with established management and policy is to ensure that all information obliga- internal audit systems. The Board and the Malmö, 8 March 2013 tions are complied with in a correct and com- Audit Committee monitor the organisation- plete manner. al assessment of internal auditing, including through contact with Nolato’s auditors. In view of the above, the Board has chosen not to carry out any specific internal audit. ■ Alf Svensson Authorised public accountant 78 Board and auditors

Fredrik Arp

Gun Boström

Henrik Jorlén

Anna Malm Bernsten

Erik Paulsson

Hans Porat Lars-Åke Rydh

Magnus Bergqvist Björn Jacobsson Eva Norrman Board and auditors 79

Nolato’s Board

Nolato’s Board of Directors consists of seven members elected by the Annual General Meeting, and three members and three deputies elected by the trade unions. At the Annual General Meeting on 24 April 2012, the Board members Fredrik Arp, Gun Boström, Henrik Jorlén, Anna Malm Bernsten, Erik Paulsson, Lars-Åke Rydh and Hans Porat were re-elected. Fredrik Arp was elected Chairman of the Board.

Board members elected by Deputies for Board members elected by employees the Annual General Meeting

Fredrik Arp, Chairman of the Board. and active owner of a number of listed property Ingegerd Andersson Member since 2009 companies. LO employee representative since 2004. and previously during the period 1998 – 1999. Born in 1942. Education: Elementary school. Shareholding in Nolato: 0. Shareholding in Nolato: 3,000 B. Born in 1951. Education: Upper secondary school. Other directorships: Chairman of the Board of Hilding Hans Porat, President and CEO of Nolato. Anders, Mediplast, Parques Reunidas and Qioptiq Member since 2008. Bo Eliasson Group. Board member of Technogym. Shareholding in Nolato: 33,898 B. LO employee representative since 2004. Previous experience: CEO of Volvo Car, Previous experience: Management positions at ABB, Shareholding in Nolato: 0. Trelleborg, PLM. Vice President of Trelleborg, CEO of Gadelius Japan. Born in 1947. Education: Lower school certiﬁcate. Born in 1953. Education: BSc (Econ) and Born in 1955. Honorary Doctor of Economics. Education: Master of Science (metallurgy). Håkan Svensson PTK employee representative since 2009. Gun Boström Lars-Åke Rydh Shareholding in Nolato: 0. Member since 1971. Member since 2005. Born in 1960. Education: Upper secondary school. Shareholding in Nolato: 417,750 A and 445,800 B. Shareholding in Nolato: 2.000 B. Previous experience: Various positions within the Other directorships: Chairman of OEM International, Nolato Group. Nefab, Plastprint, SanSac and Schuchardt Maskin. Nomination Committee Born in 1942. Education: Engineering. Board member of HL Display and Olja ek.för. Previous experience: President and CEO of Nefab. The Nomination Committee prior to the 2013 Annual Henrik Jorlén Born in 1953. Education: Master of Engineering. General Meeting consists of Henrik Jorlén, Gun Member since 1974. Boström, Erik Paulsson, Johan Lannebo (Lannebo Shareholding in Nolato: 294,000 A and 47,950 B. Fonder) and Ulf Hedlundh (Svolder). Previous experience: Management positions within the Nolato Group. Board members elected by employees Born in 1948. Education: Commercial school. Auditors Magnus Bergqvist Anna Malm Bernsten LO employee representative since 1990. Ordinary auditor: Member since 2010. Nolato Sunne AB. Alf Svensson, born in 1949. Shareholding in Nolato: 1,000 B. Shareholding in Nolato: 0. Authorised public accountant, KPMG. Other directorships: Chairman of Scientiﬁc Born in 1955. Education: Upper secondary school. Auditor of Nolato since 2008. Solutions. Board member of Birdstep, Cellavision, Shareholding in Nolato: 0. Fagerhult, Matrisen, Medivir and Oatly. Björn Jacobsson Education: BSc (econ). Previous experience: Management positions within LO employee representative since 2000. Elected auditor of companies including Bioinvent sales and marketing at international companies, Nolato Gota AB. International, Diaverum, Lindéngruppen, Midsona including Assa Abloy, GE Healthcare Life Science and Shareholding in Nolato: 0. and Peab. Pharmacia & Upjohn. Born in 1971. Education: Upper secondary school. Born in 1961. Education: Master of Engineering. Deputy auditor: Eva Norrman Camilla Alm, born in 1965. Erik Paulsson PTK employee representative since 1997, Authorised public accountant, KPMG. Member since 2003. permanent staff since 2006. Deputy auditor of Nolato since 2008. Shareholding in Nolato: Nolato Plastteknik AB. Shareholding in Nolato: 0. 609,200 A and 2,372,575 B. Shareholding in Nolato: 0. Education: BSc (econ). Other directorships: Chairman of Backahill, Born in 1951. Education: Nursing. Other major clients: Wilh. Becker, Höganäs Brinova Fastigheter, Fabege, SkiStar and Wihlborgs and Stena Fastigheter. Fastigheter. Board member of Platzer Fastigheter. Previous experience: Manager and entrepreneur within the construction and property industry since 1959. One of the founders of Peab and SkiStar, Shareholding in Nolato at 31 December 2012 incl. family and companies, according to Euroclear Sweden. 80 Group Management

Group Management

Hans Porat President and CEO since 2008. Hans Porat Employed 2008. Born in 1955. Education: Master of Science (metallurgy). Shareholding incl. family: 33,898 B.

Per-Ola Holmström Executive Vice President and CFO since 1995. Employed 1995. Born in 1964. Education: BSc (econ). Shareholding incl. family: 20,154 B.

Christer Wahlquist President of Nolato Medical since 2005. Employed 1996. Born in 1971. Per-Ola Holmström Education: Master of Science, MBA. Christer Wahlquist Shareholding incl. family: 20,712 B.

Jörgen Karlsson Jörgen Karlsson President of Nolato Telecom since 2009 and MD of Nolato Beijing since 2007. Employed 1995. Born in 1965. Education: Polymer engineering. Shareholding incl. family: 0.

Johan Arvidsson President of Nolato Industrial since 2012 and President of Nolato Hungary since 2008. Employed 1994. Born in 1969. Education: Master of Science. Johan Arvidsson Shareholding incl. family: 5,000 B. Information to shareholders 81

Information to shareholders

Annual General Meeting Shareholders who, through the trust depart- Shareholders are invited to attend Nolato’s ment of a bank or some other manager, have ■ Financial information 2013 Annual General Meeting at : p.m. on registered their shares in the name of a nom- Thursday April at Grevieparken in inee, must temporarily register the shares All financial information will be posted at www.nolato.com as soon as it is published. Grevie, Sweden. in their own name in order to be entitled to Light refreshments will be served after the participate in the Annual General Meeting During 2013, financial information will be re- Annual General Meeting. following registration. In order for this reg- leased as follows: istration to be entered in the register of share- Registering for the Annual General Meeting holders no later than Friday April , ■ Three-month interim report 2013: Shareholders who wish to participate in the shareholders must request re-registration by 25 April 2013 Annual General Meeting should be listed the manager in plenty of time. ■ Annual General Meeting: 25 April 2013 on the register of shareholders maintained ■ Six-month interim report 2013: by Euroclear Sweden AB on Friday April Nomination committee 19 July 2013 , and should register their intention to The Nomination Committee ahead of the ■ Nine-month interim report 2013: attend the Annual General Meeting with the Annual General Meeting consists of 24 October 2013 Company no later than : p.m. on Friday Henrik Jorlén, chairman, Erik Paulsson, Gun April . Boström, Johan Lannebo (Lannebo Fonder) and Ulf Hedlundh (Svolder AB). ■ Investor relations contact Attendees may register in one of the follow- The Nomination Committee can be con- ing ways: tacted by e-mailing [email protected] Per-Ola Holmström Executive Vice President and CFO n on www.nolato.com or by writing to: The Nolato Nomination Phone +46 705 763340 n by faxing + Committee, c/o Henrik Jorlén, Kommendörs- E-mail [email protected] n by writing to Nolato AB, gatan , Torekov, Sweden. SE Torekov, Sweden Reporting documents When registering, shareholders should pro- The reporting documents and the auditors’ vide their: report will be available at the company’s n name headquarters at Nolatovägen, Torekov, n address Sweden by Wednesday April . n phone number The documents will be sent to those share- n personal id or corporate id number holders requesting these. n number of shares n name of any assistants Annual Report n name of any representatives The Annual Report is sent by post to those These details will be used only for the purpos- shareholders who have notified the Compa- es of registering attendance and drawing up a ny that they wish to receive a copy. register of voters. The Annual Report is also available at the website, www.nolato.com, and can be For shareholders who will be represented by ordered by phoning + or at a representative, an original power of attor- www.nolato.com. ney should be sent when registering or, where the party holding power of attorney is a legal entity, proof of registration or other documentation demonstrating the authorisation of the company signatory. Shareholders wishing to bring one or two assistants should register their intention to do so before the cut-o date for shareholder registration. 82 Five-year review

■ Five-year review

2012 2011 2010 2009 2008 Sales and pro t Net sales (SEK million) 3,874 2,977 3,375 2,602 2,824 Sales growth (%) 30 – 12 30 – 8 17 Percentage of sales outside Sweden (%) 75 70 76 73 68 Operating profit (EBITA) (SEK million) 303 199 262 166 240 Operating profit (EBIT) (SEK million) 287 190 253 158 232 Financial income and expense (SEK million) – 15 – 7 – 10 – 10 – 16 Profit after financial income and expense (SEK million) 272 183 243 148 216 Profit for the year (SEK million) 202 132 187 123 178

Financial position Total assets (SEK million) 2,634 2,144 2,350 2,113 2,126 Shareholders’ equity (SEK million) 1,205 1,151 1,179 1,086 1,058 Interest-bearing assets (SEK million) 272 124 239 172 168 Interest-bearing liabilities and provisions (SEK million) 350 206 273 212 263 Net debt (SEK million) 78 82 34 40 95 Equity/assets ratio (%) 46 54 50 51 50 Liquidity (%) 109 123 120 122 111 Debt/equity ratio (times) 0.3 0.2 0.2 0.2 0.2

Cash ow Cash flow from operations (SEK million) 476 246 370 257 451 Investment activities (SEK million) – 335 – 134 – 286 – 118 – 143 Cash flow before financing activities (SEK million) 141 112 84 139 308

Pro tability Return on total capital before tax (%) 11.9 8.7 11.3 7.5 11.8 Return on capital employed before tax (%) 19.5 13.9 18.4 12.1 18.4 Return on operating capital before tax (%) 22.6 15.5 21.6 13.9 19.7 Return on net shareholders’ equity (%) 17.1 11.3 16.5 11.5 18.4 EBITA margin (%) 7.8 6.7 7.8 6.4 8.5 Proﬁt margin (%) 7.0 6.1 7.2 5.7 7.6 Interest coverage ratio (times) 23 16 25 14 11

Share data (see also page 70) Earnings per share after tax (SEK) 7.68 5.02 7.11 4.68 6.77 Shareholders’ equity per share (SEK) 46 44 45 41 40 Cash flow from operating activities per share (SEK) 18.09 9.35 14.06 9.77 17.14 Cash flow before financing activities excl. acq. and disp. per share (SEK) 12.05 4.26 8.74 5.28 11.71 Yield (2012 proposal) (%) 7.6 9.9 7.2 5.1 8.6 Dividend per share (2012 proposal) (SEK) 6.00 5.00 6.00 3.00 2.75

Personnel Number of employees (people) 8,421 5,496 7,563 4,308 4,531 Sales per employee (SEK thousand) 460 542 446 604 623 Proﬁt after ﬁnancial income and expense per employee (SEK thousand) 32 33 32 34 48

The Nolato Annual Report was produced by Andrarum AB. Translation by Teknotrans, Malmö. Photography Michel Thomas, Christer Pöhner, Rick- ard Lundberg, Mikael Ljungström, Doug Kanter m. . Printed in Sweden by JMS, Vellinge. Production has been carried out in line with Nolato’s sustainability philosophy, with social responsibility and a low environmental impact. The printing process is Swan labelled and FSC-certied. The paper was produced in Munkedal, Sweden, using FSC-certied pulp and in a process with minimal emissions and low energy and water consumption. By choosing high-bulk paper, the total weight of the printed matter is reduced, saving energy in transportation and postal services. Definitions and terms 83

■ Deﬁnitions

Return on total capital Adjusted earnings per share Operating profit (EBITDA) Profit after financial income and expenses, Profit after tax, excluding amortisation of Earnings before interest, taxes, depreciation plus financial expenses, as a percentage of intangible assets arising from acquisitions, and amortisation. average total capital according to the balance divided by the average number of shares. sheet. Operating profit (EBITA) Cash flow per share Earnings before interest, taxes and amortisa- Return on capital employed Cash flow before financing activities in relation of intangible assets arising from acqui- Profit after financial income and expenses, tion to the average number of shares. sitions. plus financial expenses, as a percentage of average capital employed. Capital employed Liquidity Operating profit (EBIT) consists of total capital less non-interest- Total current assets divided by total current Earnings before interest and taxes. bearing liabilities and provisions. liabilities. Debt/equity ratio Return on operating capital Net debt Interest-bearing liabilities and provisions Operating profit as a percentage of average Interest-bearing liabilities and provisions less divided by shareholders’ equity. operating capital. Operating capital consists interest-bearing assets. of total capital less non-interest-bearing lia- Equity/assets ratio bilities and provisions, less interest-bearing Earnings per share Shareholders’ equity as a percentage of total assets. Profit after tax in relation to the average num- capital according to the balance sheet. ber of shares. Return on shareholders’ equity Profit margin Profit after tax in relation to average share- Interest coverage ratio Profit after financial income and expenses as holders’ equity. Profit after financial income and expenses, a percentage of net sales. plus financial expenses, divided by financial EBITA margin expenses. Operating profit ( ) as a percentage of net sales.

■ A few specialist terms used within the Nolato Group

Polymer materials Extrusion Clean room Materials such as plastic, silicone, rubber This is a method for continuously manufac- A room with extremely strict requirements and thermoplastic elastomers (TPEs). turing products in strands, such as medical in terms of the absence of dust particles, etc. tubing. Used by Nolato when producing medical Injection moulding technology components and mobile phone A method for the production of polymer Dip moulding components. components. The material is injected under Dip moulding is used to manufacture breath- high pressure into a mould in which the coming bags, ventilator bellows and catheter bal- Shielding ponent is made. loons from synthetic or natural rubber latex. Technology for shielding electronics from Pre-heated formers are dipped into liquid electromagnetic interference, both internally Injection blow moulding latex rubber and products are shaped by the between di erent electronic components and Production technique whereby a container geometry of the formers. from external interference. This is achieved is ﬁrst injection-moulded and then inﬂated using silicone gaskets containing silver or so that a receptacle is formed. Injection blow Haptic technology/haptics nickel particles. moulding is used by Nolato in the production Designing a surface so that a function or cos- of pharmaceutical packaging. metic e ect can be felt. ■ Nolato AB ■ Nolato Hertila ■ Nolato Lövepac ■ Nolato Silikonteknik SE-269 04 Torekov, Sweden Persbogatan 1 Ringvägen 5 Bergsmansvägen 4, Street address: Nolatovägen SE-265 38 Åstorp, Sweden SE-280 40 Skånes Fagerhult, SE-694 91 Hallsberg, Sweden Phone: +46 431 442290 Phone: +46 42 66880 Sweden Phone: +46 582 88900 Fax: +46 431 442291 Phone: +46 433 32300 ■ Beijing, China E-mail: [email protected] ■ Nolato Hungary 402 Longsheng Industrial Park Jánossomorjai utca 3 ■ Nolato MediTech 7, Rong Chang Road East ■ Nolato Beijing HU-9200 Mosonmagyaróvár, Box 93, SE-242 21 Hörby, Sweden Beijing Development Area 402 Longsheng Industrial Park Hungary Street address: Medicingatan Beijing 100176, P.R. China 7, Rong Chang Road East Phone: +36 96 578770 Phone: +46 415 19700 Phone: +86 10 6787 2200 Beijing Development Area ■ Negoiesti, Romania ■ Lomma, Sweden ■ Kuala Lumpur, Malaysia Beijing 100176, P.R. China DIBO Industrial Park, H13 Box 28, SE-234 21 Lomma, Sweden Phone: +86 10 6787 2200 Nolato EMC Production Center Negoiesti, Prahova, Street address: Koppargatan 13 Lot 39, Jalan SC 2 ■ Åhus, Sweden Romania, 107086 Phone: +46 415 19700 Pusat Perindustrian Sg Chua Snidaregatan 1 43000 Kajang, Selangor, Malaysia SE-296 31 Åhus, Sweden ■ Nolato Jaycare ■ Nolato MediTor Phone: +603 8739 3603 Phone: +46 708 744170 Walton Road, Farlington SE-269 04 Torekov, Sweden ■ San Diego, U.S.A. Portsmouth PO6 1TS Street address: Nolatovägen ■ Nolato Sunne 16208 Palomino Mesa Ct Great Britain Phone: +46 431 442260 Box 116, SE-686 23 Sunne, Sweden San Diego, CA 92127, U.S.A. Phone: +44 2392 370102 Street address: Sundgatan 21 Phone: +1 858 859 5270 ■ Newcastle, Great Britain ■ Nolato Plastteknik Phone: +46 565 17300 New York Way, New York Ind. Park Box 4123, ■ Nolato Cerbo Newcastle upon Tyne NE27 0QF SE-422 04 Hisings Backa, Sweden Box 905, SE-461 29 Trollhättan, Great Britain Street address: Exportgatan 59 www.nolato.com Sweden Phone: +44 191 296 0303 Phone: +46 31 588400 Street address: Verkmästarev. 1-3 Phone: +46 520 409900 ■ Lövepac Converting ■ Nolato Polymer th SE-269 04 Torekov, Sweden ■ Paris, France 4 Floor, No. 21 Xingsheng Road BDA, Beijing, 100176 Street address: Nolatovägen 15, Rue Vignon Phone: +46 431 442200 FR-75008 Paris, France P.R. China Phone: +33 1 47 975284 Phone: +86 10 6780 5580 ■ Ängelholm, Sweden ■ Shenzhen, China Framtidsgatan 6 ■ Nolato Contour Unit 401, Factory 2, SE-262 73 Ängelholm, Sweden 660 VandeBerg Street Hasee Hua Sai Industrial Park, Phone: +46 431 442200 Baldwin, WI 54002, U.S.A. #466, Ji Hua Road, Bantian, Phone: +1 715 684 4614 Longgang District, Shenzhen, 518129, P.R. China ■ Nolato Gota Phone: +86 755 8610 6804 Box 29, SE-533 21 Götene, Sweden ■ Chennai, India Street address: Alsborgsgatan 2 RBF-2, Road R-1 North, Phone: +46 511 342100 West 670, Cherivi, Sri City SEZ Satyavedu Mandal 517588 Andhra Pradesh, India Phone: +91 857 6306850